Question 1

Prepare a partial balance sheet for Tangiers Industries at December 31, 201X, from the following information:

Accepted Answer

The answer of Prepare a partial balance sheet for Tangiers...

Question 2

In the direct write-off method, writing off an account causes:

Accepted Answer

A)  a decrease in expense and an increase in an asset. 
B)  an increase in expense and a decrease in an asset. 
C)  a decrease in the Allowance account and a decrease in expense. 
D)  an increase in Accounts Receivable and a decrease to revenue. 
A)  a decrease in expense and an increase in an asset. 
B)  an increase in expense and a decrease in an asset. 
C)  a decrease in the Allowance account and a decrease in expense. 
D)  an increase in Accounts Receivable and a decrease to revenue.

Question 3

Harp Brewing received a bankruptcy notice from their customer Jerry. If using an allowance method, the entry to write-off his balance of $1,300 would be:

Accepted Answer

A) 
  
B) 
  
C) 
  
D)  None of the above 
A) 
  
B) 
  
C) 
  
D)  None of the above

Question 4

The income statement approach estimates a percentage of Accounts Receivable that is uncollectible.

Accepted Answer

A) True 
 B)False

Question 5

Determine the amount of the adjustment for bad debts given:
Bad debts are estimated to be 8% of receivables

Accepted Answer

The answer of Determine the amount of the adjustment for...

Question 6

Prepare the adjusting journal entry for Bad Debts Expense from the following information using the balance sheet approach. The Allowance for Doubtful Accounts has a credit balance of $3,000.

Accepted Answer

The answer of Prepare the adjusting journal entry for Bad...

Question 7

A company uses the allowance method and has estimated $28,000 as uncollectible. The journal entry to record the estimated bad debts is:

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 8

Ray Lumber Company collects $500 on an account that had been directly written off earlier the same year in the amount of $1,000. The journal entry to record the reinstatement transaction would include a:

Accepted Answer

A)  $1,000 debit to Accounts Receivable. 
B)  $500 debit to Accounts Receivable. 
C)  $500 debit to Bad Debts Recovered. 
D)  $1,000 debit to Bad Debts Expense. 
A)  $1,000 debit to Accounts Receivable. 
B)  $500 debit to Accounts Receivable. 
C)  $500 debit to Bad Debts Recovered. 
D)  $1,000 debit to Bad Debts Expense.

Question 9

The Allowance for Doubtful Accounts is shown on the balance sheet as a contra-asset.

Accepted Answer

A) True 
 B)False

Question 10

The direct write-off method prescribes that a previously written off account will reopen when the customer:

Accepted Answer

A)  sends the full amount to pay off the account. 
B)  sends any amount to pay on their account. 
C)  pays the collection bureau. 
D)  None of the above 
A)  sends the full amount to pay off the account. 
B)  sends any amount to pay on their account. 
C)  pays the collection bureau. 
D)  None of the above

Question 11

A debit balance in Allowance for Doubtful Accounts indicates the estimate for Bad Debts was too low.

Accepted Answer

A) True 
 B)False

Question 12

Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $510,000 and Allowance for Doubtful Accounts has a credit balance $3,000. What is the net realizable value of the accounts receivable?

Accepted Answer

A)  $513,000 
B)  $507,000 
C)  $510,000 
D)  $504,000 
A)  $513,000 
B)  $507,000 
C)  $510,000 
D)  $504,000

Question 13

As the past due time increases for an account, the likelihood of collecting that account:

Accepted Answer

A)  usually goes down. 
B)  usually goes up. 
C)  Time does not affect collectibility. 
D)  None of the above 
A)  usually goes down. 
B)  usually goes up. 
C)  Time does not affect collectibility. 
D)  None of the above

Question 14

Uncollectible accounts could:

Accepted Answer

A)  affect accounts payable. 
B)  ease credit restrictions. 
C)  decrease cash shortages. 
D)  be a major cost of selling goods on account. 
A)  affect accounts payable. 
B)  ease credit restrictions. 
C)  decrease cash shortages. 
D)  be a major cost of selling goods on account.

Question 15

Companies that feel aging is too time-consuming may estimate Bad Debts based on a percentage of total Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 16

Open Range Foods writes off a bad debt of $400 on a specific customer account. The journal entry for this transaction under the allowance method would include:

Accepted Answer

A)  a debit to Bad Debts Expense. 
B)  a credit to Bad Debts Expense. 
C)  a credit to Allowance for Doubtful Accounts. 
D)  a debit to Allowance for Doubtful Accounts. 
A)  a debit to Bad Debts Expense. 
B)  a credit to Bad Debts Expense. 
C)  a credit to Allowance for Doubtful Accounts. 
D)  a debit to Allowance for Doubtful Accounts.

Question 17

The allowance method requires:

Accepted Answer

A)  an estimated entry to Bad Debts Expense. 
B)  a known individual account to write off bad debts. 
C)  a known uncollectible amount to write off bad debts. 
D)  None of these answers is correct. 
A)  an estimated entry to Bad Debts Expense. 
B)  a known individual account to write off bad debts. 
C)  a known uncollectible amount to write off bad debts. 
D)  None of these answers is correct.

Question 18

Which of the following is considered a temporary account?

Accepted Answer

A)  Accounts Receivable 
B)  Merchandise Inventory 
C)  Allowance for Doubtful Accounts 
D)  Bad Debts Expense 
A)  Accounts Receivable 
B)  Merchandise Inventory 
C)  Allowance for Doubtful Accounts 
D)  Bad Debts Expense

Question 19

The balance in the Allowance for Doubtful Accounts is ignored under which of the following approaches?

Accepted Answer

A)  Balance sheet approach 
B)  Income statement approach 
C)  Direct write-off approach 
D)  All three approaches 
A)  Balance sheet approach 
B)  Income statement approach 
C)  Direct write-off approach 
D)  All three approaches

Question 20

If there were an uncollectible write off reversal in the same year as the write off, Bad Debts Recovered would be used rather than Bad Debts Expense.

Accepted Answer

A) True 
 B)False

Exam 13: Accounting for Bad Debts

Prepare a partial balance sheet for Tangiers Industries at December 31, 201X, from the following information:

In the direct write-off method, writing off an account causes:

Harp Brewing received a bankruptcy notice from their customer Jerry. If using an allowance method, the entry to write-off his balance of $1,300 would be:

The income statement approach estimates a percentage of Accounts Receivable that is uncollectible.

Determine the amount of the adjustment for bad debts given: Bad debts are estimated to be 8% of receivables

Prepare the adjusting journal entry for Bad Debts Expense from the following information using the balance sheet approach. The Allowance for Doubtful Accounts has a credit balance of $3,000.

A company uses the allowance method and has estimated $28,000 as uncollectible. The journal entry to record the estimated bad debts is:

Ray Lumber Company collects $500 on an account that had been directly written off earlier the same year in the amount of $1,000. The journal entry to record the reinstatement transaction would include a:

The Allowance for Doubtful Accounts is shown on the balance sheet as a contra-asset.

The direct write-off method prescribes that a previously written off account will reopen when the customer:

A debit balance in Allowance for Doubtful Accounts indicates the estimate for Bad Debts was too low.

Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $510,000 and Allowance for Doubtful Accounts has a credit balance $3,000. What is the net realizable value of the accounts receivable?

As the past due time increases for an account, the likelihood of collecting that account:

Uncollectible accounts could:

Companies that feel aging is too time-consuming may estimate Bad Debts based on a percentage of total Accounts Receivable.

Open Range Foods writes off a bad debt of $400 on a specific customer account. The journal entry for this transaction under the allowance method would include:

The allowance method requires:

Which of the following is considered a temporary account?

The balance in the Allowance for Doubtful Accounts is ignored under which of the following approaches?

If there were an uncollectible write off reversal in the same year as the write off, Bad Debts Recovered would be used rather than Bad Debts Expense.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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