Question 1

Bad Debts Expense is:

Accepted Answer

A)  not included in Cost of Goods Sold. 
B)  considered an expense matched with revenues. 
C)  listed on the income statement. 
D)  All of the above. 
A)  not included in Cost of Goods Sold. 
B)  considered an expense matched with revenues. 
C)  listed on the income statement. 
D)  All of the above.

Question 2

Canteen Depot estimated uncollectible accounts in the amount of $900 for the period. There is a credit balance in the allowance account of $400. Under the aging of receivables method, the entry to record bad debts expense is:

Accepted Answer

A)  debit Bad Debts Expense $500; credit Accounts Receivable $500. 
B)  debit Allowance for Doubtful Accounts $900; credit Bad Debts Expense $900. 
C)  debit Bad Debts Expense $500; credit Allowance for Doubtful Accounts $500. 
D)  debit Allowance for Doubtful Accounts $900; credit Accounts Receivable $900. 
A)  debit Bad Debts Expense $500; credit Accounts Receivable $500. 
B)  debit Allowance for Doubtful Accounts $900; credit Bad Debts Expense $900. 
C)  debit Bad Debts Expense $500; credit Allowance for Doubtful Accounts $500. 
D)  debit Allowance for Doubtful Accounts $900; credit Accounts Receivable $900.

Question 3

The normal balance of the Bad Debts Expense account is a debit.

Accepted Answer

A) True 
 B)False

Question 4

Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $600,000 and Allowance for Doubtful Accounts has a debit balance of $40,000. What is the net realizable value of accounts receivable?

Accepted Answer

A)  $560,000 
B)  $640,000 
C)  $600,000 
D)  $40,000 
A)  $560,000 
B)  $640,000 
C)  $600,000 
D)  $40,000

Question 5

The journal entry to write off an uncollectible account under the allowance method would include a credit to:

Accepted Answer

A)  Sales. 
B)  Accounts Receivable. 
C)  Allowance for Doubtful Accounts. 
D)  Bad Debts Expense. 
A)  Sales. 
B)  Accounts Receivable. 
C)  Allowance for Doubtful Accounts. 
D)  Bad Debts Expense.

Question 6

A company uses the allowance method and has determined a customer's bill for $6,000 must be written off. The journal entry to record the write off is:

Accepted Answer

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

Question 7

Plumbing Unlimited uses the direct write-off method for uncollectible accounts. Record the following transactions in general journal form.
Aug 15 Sold merchandise on account to Maureen Townsend for $3,500. The cost to
Plumbing Unlimited for the merchandise is $1,000.
Sept 15 Received $1,200 cash payment from Maureen Townsend on her account.
Sept 30 Received $800 cash payment from Maureen Townsend on her account.
Oct 15 Wrote off the balance due on Maureen's account as uncollectible.

Accepted Answer

The answer of Plumbing Unlimited uses the direct write-off method...

Question 8

When a customer's account is written off:

Accepted Answer

A)  net realizable value of the Accounts Receivable remains the same. 
B)  net realizable value of the Accounts Receivable decreases. 
C)  net realizable value of the Accounts Receivable increases. 
D)  None of the above 
A)  net realizable value of the Accounts Receivable remains the same. 
B)  net realizable value of the Accounts Receivable decreases. 
C)  net realizable value of the Accounts Receivable increases. 
D)  None of the above

Question 9

Bad Debts Recovered is a revenue account usually reported in Other Income on the Income Statement.

Accepted Answer

A) True 
 B)False

Question 10

An entry reinstating an account that was previously written off under the allowance method would show a(n):

Accepted Answer

A)  decrease to Bad Debts Expense and a decrease to Accounts Receivable. 
B)  increase to Accounts Receivable and a decrease to Allowance for Doubtful Accounts. 
C)  increase to Accounts Receivable and an increase to Allowance for Doubtful Accounts. 
D)  decrease to Bad Debts Expense and an increase to Allowance for Doubtful Accounts. 
A)  decrease to Bad Debts Expense and a decrease to Accounts Receivable. 
B)  increase to Accounts Receivable and a decrease to Allowance for Doubtful Accounts. 
C)  increase to Accounts Receivable and an increase to Allowance for Doubtful Accounts. 
D)  decrease to Bad Debts Expense and an increase to Allowance for Doubtful Accounts.

Question 11

When a specific account receivable is written off as uncollectible under the direct write off method, it decreases the Allowance for Doubtful Accounts.

Accepted Answer

A) True 
 B)False

Question 12

The Accounts Receivable subsidiary ledger is:

Accepted Answer

A)  updated when a debt is identified as uncollectible. 
B)  credited when a debt is identified as uncollectible. 
C)  debited when a debt is identified as uncollectible. 
D)  Both A and B 
A)  updated when a debt is identified as uncollectible. 
B)  credited when a debt is identified as uncollectible. 
C)  debited when a debt is identified as uncollectible. 
D)  Both A and B

Question 13

What type of account is a Bad Debts Expense?

Accepted Answer

A)  Asset 
B)  Expense 
C)  Contra Asset 
D)  Liability 
A)  Asset 
B)  Expense 
C)  Contra Asset 
D)  Liability

Question 14

Determine the amount of the adjustment for bad debts given:
Bad debts are estimated to be 11% of credit sales

Accepted Answer

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

Question 15

A company is not able to reasonably estimate its bad debts expense. The method it may use is:

Accepted Answer

A)  net realizable value method. 
B)  direct write-off method. 
C)  aging method. 
D)  income statement method. 
A)  net realizable value method. 
B)  direct write-off method. 
C)  aging method. 
D)  income statement method.

Question 16

On December 31, 2019, Balloon Buddies had a balance in Accounts Receivable of $39,000. Net credit sales for the year were $334,000. The Allowance for Doubtful Accounts has a credit balance of $700. Journalize the recording of the bad debts expense under the balance sheet approach if $1,360 is the estimated amount of uncollectible accounts.

Accepted Answer

The answer of On December 31, 2019, Balloon Buddies had...

Question 17

On December 31, 2019, Balloon Buddies had a balance in Accounts Receivable of $39,000. Net credit sales for the year were $334,000. The Allowance for Doubtful Accounts has a debit balance of $700. Journalize the recording of the bad debts expense under the balance sheet approach if $1,360 is the estimated amount of uncollectible accounts.

Accepted Answer

The answer of On December 31, 2019, Balloon Buddies had...

Question 18

Allowance for Doubtful Accounts is a contra-asset account.

Accepted Answer

A) True 
 B)False

Question 19

Gross Accounts Receivable is $18,000. Allowance for Doubtful Accounts has a credit balance of $300. Net credit sales for the year are $150,000. In the past, 2% of credit sales had proved uncollectible, and an aging of the receivables indicates $2,100 as uncollectible. What would be the adjusted balance of the Allowance account under the balance sheet approach?

Accepted Answer

A)  $1,800 
B)  $3,300 
C)  $2,100 
D)  $2,400 
A)  $1,800 
B)  $3,300 
C)  $2,100 
D)  $2,400

Question 20

Current assets listed on the balance sheet include:

Accepted Answer

A)  Land. 
B)  Buildings. 
C)  Allowance for Doubtful Accounts. 
D)  Sales. 
A)  Land. 
B)  Buildings. 
C)  Allowance for Doubtful Accounts. 
D)  Sales.

Exam 13: Accounting for Bad Debts

Bad Debts Expense is:

Canteen Depot estimated uncollectible accounts in the amount of $900 for the period. There is a credit balance in the allowance account of $400. Under the aging of receivables method, the entry to record bad debts expense is:

The normal balance of the Bad Debts Expense account is a debit.

Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $600,000 and Allowance for Doubtful Accounts has a debit balance of $40,000. What is the net realizable value of accounts receivable?

The journal entry to write off an uncollectible account under the allowance method would include a credit to:

A company uses the allowance method and has determined a customer's bill for $6,000 must be written off. The journal entry to record the write off is:

When a customer's account is written off:

Bad Debts Recovered is a revenue account usually reported in Other Income on the Income Statement.

An entry reinstating an account that was previously written off under the allowance method would show a(n):

When a specific account receivable is written off as uncollectible under the direct write off method, it decreases the Allowance for Doubtful Accounts.

The Accounts Receivable subsidiary ledger is:

What type of account is a Bad Debts Expense?

Determine the amount of the adjustment for bad debts given: Bad debts are estimated to be 11% of credit sales

A company is not able to reasonably estimate its bad debts expense. The method it may use is:

Allowance for Doubtful Accounts is a contra-asset account.

Current assets listed on the balance sheet include:

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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