Question 1

When the allowance method is used to account for uncollectible accounts the ______________ is credited when an account is determined to be uncollectible.

Accepted Answer

The answer of When the allowance method is used to...

Question 2

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

Accepted Answer

A) True 
 B)False

Question 3

The basic issues in accounting for notes receivable include each of the following except

Accepted Answer

A)  analyzing notes receivable. 
B)  disposing of notes receivable. 
C)  recognizing notes receivable. 
D)  valuing notes receivable. 
A)  analyzing notes receivable. 
B)  disposing of notes receivable. 
C)  recognizing notes receivable. 
D)  valuing notes receivable.

Question 4

Banks that issue credit cards generally charge retailers a fee of 2 to 6% of the amount of sale. List reasons why companies are willing to pay these fees.

Accepted Answer

1. The use of bank credit cards increase

Question 5

An alternative name for Bad Debt Expense is

Accepted Answer

A)  Deadbeat Expense. 
B)  Uncollectible Accounts Expense. 
C)  Collection Expense. 
D)  Credit Loss Expense. 
A)  Deadbeat Expense. 
B)  Uncollectible Accounts Expense. 
C)  Collection Expense. 
D)  Credit Loss Expense.

Question 6

When an account becomes uncollectible and must be written off

Accepted Answer

A)  Allowance for Doubtful Accounts should be credited. 
B)  Accounts Receivable should be credited. 
C)  Bad Debt Expense should be credited. 
D)  Sales Revenue should be debited. 
A)  Allowance for Doubtful Accounts should be credited. 
B)  Accounts Receivable should be credited. 
C)  Bad Debt Expense should be credited. 
D)  Sales Revenue should be debited.

Question 7

The following data exists for Carley Company. $\begin{array}{lrr}&\underline{2016}&\underline{2015}\
\text { Accounts Receivable } & \$ 50,000 & \$ 70,000 \
\text { Net Sales } & 500,000 & 410,000
\end{array}$
 Calculate the accounts receivable turnover and the average collection period for accounts receivable in days for 2016.

Accepted Answer

Accounts receivables

Question 8

Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31 2016 before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: $$\begin{array} { l cc } 
& & \begin{array} { c } 
\text { Estimated Percentage } \
\text { Uncollectible }
\end{array} \
\text { Current Accounts } & \$ 120,000 & 1 \% \
1 - 30 \text { days past due } & 20,000 & 3 \% \
31 - 60 \text { days past due } & 10,000 & 6 \% \
\text { 61-90 days past due } & 10,000 & 12 \% \
\text { Over } 90 \text { days past due } & 8,000 & 30 \% \
\text { Total Accounts Receivable } & \$ 168,000 &
\end{array}$$ 
Instructions
(a) Prepare the adjusting entry on December 31 2016 to recognize bad debt expense.
(b) Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts.
(c) Assume that the company has a policy of providing for bad debts at the rate of 1% of sales that sales for 2016 were $550000 and that Allowance for Doubtful Accounts had a $650 credit balance before adjustment. Prepare the adjusting entry for the current year's provision for bad debts.

Accepted Answer

None

Question 9

A 60-day note receivable dated July 11 has a maturity date of

Accepted Answer

A)  September 11. 
B)  September 9. 
C)  September 10. 
D)  September 12. 
A)  September 11. 
B)  September 9. 
C)  September 10. 
D)  September 12.

Question 10

On March 9 Hill gave McGraw Company a 60-day 10% promissory note for $2500. Hill honors the note on May 9. Record the collection of the note and interest by McGraw assuming that no interest has been accrued.

Accepted Answer

None

Question 11

The account Allowance for Doubtful Accounts is closed out at the end of the year.

Accepted Answer

A) True 
 B)False

Question 12

The _____________ basis of estimating uncollectibles provides a better _____________ of bad debt expense with sales revenue and therefore emphasizes income statement relationships.

Accepted Answer

percentage

Question 13

A finance company or bank that purchases receivables from businesses is known as a ______________.

Accepted Answer

The answer of A finance company or bank that purchases...

Question 14

An aging of a company's accounts receivable indicates that $13000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1200 credit balance the adjustment to record bad debts for the period will require a

Accepted Answer

A)  debit to Bad Debt Expense for $13000. 
B)  debit to Allowance for Doubtful Accounts for $11800. 
C)  debit to Bad Debt Expense for $11800. 
D)  credit to Allowance for Doubtful Accounts for $13000. 
A)  debit to Bad Debt Expense for $13000. 
B)  debit to Allowance for Doubtful Accounts for $11800. 
C)  debit to Bad Debt Expense for $11800. 
D)  credit to Allowance for Doubtful Accounts for $13000.

Question 15

A 90-day note dated May 18 has a maturity date of

Accepted Answer

A)  August 18. 
B)  August 16. 
C)  August 17. 
D)  August 19. 
A)  August 18. 
B)  August 16. 
C)  August 17. 
D)  August 19.

Question 16

An inexperienced accountant made the following entries. In each case the explanation to the entry is correct. $\begin{array}{lrr}
  \text {  27\quad\quad Cash} &780\
\quad\quad\quad \text {Bad Debt Expense  } &&780\
 \quad\quad\text { (Collection of account previously written off as } &\
 \quad\quad\text { uncollectible under allowance method)  } &\
\end{array}$

$\begin{array}{lll}
  \text {  31\quad\quad Bad Debt Expense} &400\
\quad\quad\quad \text {  Allowance for Doubtful Accounts} &&400\
\quad\quad\text {  (To recognize estimated bad debts based on $ 1 \% $ } &\
 \quad\quad\text { of net sales of $ \$ 400,000 $ } &\
\end{array}$
 Instructions
Prepare the correcting entries.

Accepted Answer

The answer of An inexperienced accountant made the following entries....

Question 17

Megan's Products is undecided about which base to use in estimating uncollectible accounts. On December 31 2016 the balance in Accounts Receivable was $308000 and net credit sales amounted to $2700000 during 2016. An aging analysis of the accounts receivable indicated that $31000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible.
Instructions
Prepare the adjusting entries to record estimated bad debt expense using the (1) percentage of sales basis and (2) the percentage of receivables basis under each of the following independent assumptions:
(a) Allowance for Doubtful Accounts has a credit balance of $2300 before adjustment.
(b) Allowance for Doubtful Accounts has a debit balance of $370 before adjustment.

Accepted Answer

(1) Percentage-of-sales basis:
The foll

Question 18

If a department store fails to make the entry to accrue the finance charges due from customers

Accepted Answer

A)  accounts receivable will be overstated. 
B)  interest revenue will be understated. 
C)  interest expense will be overstated. 
D)  interest expense will be understated. 
A)  accounts receivable will be overstated. 
B)  interest revenue will be understated. 
C)  interest expense will be overstated. 
D)  interest expense will be understated.

Question 19

Using the percentage-of-receivables method for recording bad debt expense estimated uncollectible accounts are $12000. If the balance of the Allowance for Doubtful Accounts is $2500 credit before adjustment what is the amount of bad debt expense for that period?

Accepted Answer

A)  $2500 
B)  $9500 
C)  $12000 
D)  $14500 
A)  $2500 
B)  $9500 
C)  $12000 
D)  $14500

Question 20

On February 1 2016 Fresno Company sells merchandise on account to Aiken Company for $7800. The entry to record this transaction by Fresno Company is a. 
$\begin{array}{lrr}
  \text {  Sales Revenue} &7,800\
 \text {  Accounts Payable} &&7,800\
\end{array}$

b. 
$\begin{array}{lrr}
  \text { Cash } &7,800\
 \text { Sales Revenue } &&7,800\
\end{array}$

c.
$\begin{array}{lrr}
  \text { Accounts Receivable } &7,800\
 \text { Sales Revenue } &&7,800\
\end{array}$

d. 
$\begin{array}{lrr} 
  \text {Notes Recenable  } &7,800\
 \text { Accounts Receivable} &&7,800\
\end{array}$

Accepted Answer

The answer of On February 1 2016 Fresno Company sells...

Exam 9: Accounting for Receivables

When the allowance method is used to account for uncollectible accounts the ______________ is credited when an account is determined to be uncollectible.

Both the gross amount of receivables and the allowance for doubtful accounts should be reported in the financial statements.

The basic issues in accounting for notes receivable include each of the following except

Banks that issue credit cards generally charge retailers a fee of 2 to 6% of the amount of sale. List reasons why companies are willing to pay these fees.

An alternative name for Bad Debt Expense is

When an account becomes uncollectible and must be written off

The following data exists for Carley Company. Accounts Receivable \ 50,000 \ 70,000 Net Sales 500,000 410,000 Calculate the accounts receivable turnover and the average collection period for accounts receivable in days for 2016.

A 60-day note receivable dated July 11 has a maturity date of

On March 9 Hill gave McGraw Company a 60-day 10% promissory note for $2500. Hill honors the note on May 9. Record the collection of the note and interest by McGraw assuming that no interest has been accrued.

The account Allowance for Doubtful Accounts is closed out at the end of the year.

The _____________ basis of estimating uncollectibles provides a better _____________ of bad debt expense with sales revenue and therefore emphasizes income statement relationships.

A finance company or bank that purchases receivables from businesses is known as a ______________.

An aging of a company's accounts receivable indicates that $13000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1200 credit balance the adjustment to record bad debts for the period will require a

A 90-day note dated May 18 has a maturity date of

If a department store fails to make the entry to accrue the finance charges due from customers

Using the percentage-of-receivables method for recording bad debt expense estimated uncollectible accounts are $12000. If the balance of the Allowance for Doubtful Accounts is $2500 credit before adjustment what is the amount of bad debt expense for that period?

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

The _ basis of estimating uncollectibles provides a better _ of bad debt expense with sales revenue and therefore emphasizes income statement relationships.