Question 1

Match each description to the appropriate term a-d). Each term may be used more than once.
-Offers two methods of estimating uncollectible accounts.

Accepted Answer

A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method 
A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method

Question 2

Match each description to the appropriate term a-d). Each term may be used more than once.
-When using this method, estimated bad debts are added to the existing allowance balance.

Accepted Answer

A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method 
A) Direct write-off method 
B) Aging of receivables method 
C) Percent of sales method 
D) Allowance method

Question 3

The direct write­off method records bad debt expense when an account is determined to be uncollectible.

Accepted Answer

A) True 
 B)False

Question 4

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

Accepted Answer

A) True 
 B)False

Question 5

A disadvantage of factoring is that the company selling its receivables immediately receives cash.

Accepted Answer

A) True 
 B)False

Question 6

Other receivables includes all of the following except

Accepted Answer

A)  notes receivable 
B)  receivables from employees 
C)  taxes receivable 
D)  interest receivable 
A)  notes receivable 
B)  receivables from employees 
C)  taxes receivable 
D)  interest receivable

Question 7

Match each description to the appropriate term a-h).
-The party promising to pay a note

Accepted Answer

A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate 
A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate

Question 8

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?

Accepted Answer

A)  debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000 
B)  debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 
C)  debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800 
D)  debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800 
A)  debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000 
B)  debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 
C)  debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800 
D)  debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800

Question 9

Current assets are usually listed in order

Accepted Answer

A)  of the due date 
B)  of the size 
C)  alphabetically 
D)  of liquidity 
A)  of the due date 
B)  of the size 
C)  alphabetically 
D)  of liquidity

Question 10

One of the weaknesses of the direct write-off method is that it

Accepted Answer

A)  understates accounts receivable on the balance sheet 
B)  violates the matching principle 
C)  is too difficult to use for many companies 
D)  is based on estimates 
A)  understates accounts receivable on the balance sheet 
B)  violates the matching principle 
C)  is too difficult to use for many companies 
D)  is based on estimates

Question 11

Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial payment on the account of James. The journal entry to record the initial write-off includes a

Accepted Answer

A)  debit to Allowance for Doubtful Accounts 
B)  credit to Cash 
C)  debit to Accounts Receivable, James 
D)  credit to Bad Debt Expense 
A)  debit to Allowance for Doubtful Accounts 
B)  credit to Cash 
C)  debit to Accounts Receivable, James 
D)  credit to Bad Debt Expense

Question 12

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 13

Match each description to the appropriate term a-i).
-A receivable created from selling merchandise or services on account

Accepted Answer

A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring 
A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging report 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Factoring

Question 14

Match each description to the appropriate term a-h).
-The dollar amount stated on a promissory note

Accepted Answer

A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate 
A) Face amount 
B) Term 
C) Interest 
D) Maturity value 
E) Dishonored note
F)Maker
G)Notes receivable
H)Interest rate

Question 15

No allowance account is used with the direct write-off method.

Accepted Answer

A) True 
 B)False

Question 16

If the maker of a promissory note fails to pay the note on the due date, the note is said to be

Accepted Answer

A)  displaced 
B)  disallowed 
C)  dishonored 
D)  discounted 
A)  displaced 
B)  disallowed 
C)  dishonored 
D)  discounted

Question 17

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 18

Determine the due date and amount of interest due at maturity on the following notes:

Accepted Answer

a) May 14; $120 $8,0

Question 19

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

Accepted Answer

A)  $110 
B)  $640 
C)  $530 
D)  $750 
A)  $110 
B)  $640 
C)  $530 
D)  $750

Question 20

For a business that uses the allowance method of accounting for uncollectible receivables:
a) Journalize the entries to record the following:
1) Record the adjusting entry at December 31, the end of the first fiscal year, to record the bad debt expense. The accounts receivable account has a balance of $800,000, and the contra asset account before adjustment has a debit balance of $600. Analysis of the receivables indicates uncollectible receivables of $18,000.
2) In March of the next year, the $350 owed by Fronk Co. on account is written off as uncollectible.
3) In November of the next year, $200 of the Fronk Co. account is reinstated and payment of that amount is received.
4) In December of the next year, $400 is received on the $600 owed by Dodger Co. and the remainder is written off as uncollectible.
b) Redo the entries in steps 2), 3), and 4) assuming the company uses the direct write-off method.

Accepted Answer

The answer of For a business that uses the allowance...

Exam 8: Receivables

Match each description to the appropriate term a-d). Each term may be used more than once. -Offers two methods of estimating uncollectible accounts.

Match each description to the appropriate term a-d). Each term may be used more than once. -When using this method, estimated bad debts are added to the existing allowance balance.

The direct write­off method records bad debt expense when an account is determined to be uncollectible.

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

A disadvantage of factoring is that the company selling its receivables immediately receives cash.

Other receivables includes all of the following except

Match each description to the appropriate term a-h). -The party promising to pay a note

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?

Current assets are usually listed in order

One of the weaknesses of the direct write-off method is that it

Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial payment on the account of James. The journal entry to record the initial write-off includes a

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

Match each description to the appropriate term a-i). -A receivable created from selling merchandise or services on account

Match each description to the appropriate term a-h). -The dollar amount stated on a promissory note

No allowance account is used with the direct write-off method.

If the maker of a promissory note fails to pay the note on the due date, the note is said to be

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

Determine the due date and amount of interest due at maturity on the following notes:

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Filters

The direct writeoff method records bad debt expense when an account is determined to be uncollectible.