Question 1

Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account

Accepted Answer

A) affects only income statement accounts 
B) is not an acceptable practice 
C) affects only balance sheet accounts 
D) affects both balance sheet and income statement accounts 
A) affects only income statement accounts 
B) is not an acceptable practice 
C) affects only balance sheet accounts 
D) affects both balance sheet and income statement accounts C

Question 2

Discuss the similarities and differences between accounts receivable, notes receivable, and other receivables.

Accepted Answer

Accounts receivable result from the sale of goods and services on credit. They are normally collected within a short period of time (30-60 days) and are classified as current assets on the balance sheet.​
Notes receivable can also result from the sale of goods, generally when the amount owed is due in more than 60 days. Notes can also be used to settle accounts receivable. Notes are formal written instruments of credit. When collection is expected to be in less than one year, they are classified as current assets on the balance sheet.​
Other receivables result from non-trade transactions (interest, taxes, amounts due from employees). They are generally reported separately on the balance sheet. If collection is expected in less than one year, they are classified as current assets. If not, they are classified as investments.

Question 3

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Accepted Answer

A) will increase net income in the period it is collected 
B) will decrease net income in the period it is collected 
C) does not affect net income in the period it is collected 
D) requires a correcting entry for the period in which the account was written off 
A) will increase net income in the period it is collected 
B) will decrease net income in the period it is collected 
C) does not affect net income in the period it is collected 
D) requires a correcting entry for the period in which the account was written off C

Question 4

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on this estimate, which of the following adjusting entries should be made?

Accepted Answer

A) debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800 
B) debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200 
C) debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800 
D) debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800 
A) debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800 
B) debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200 
C) debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800 
D) debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800

Question 5

Trade receivables occur when two companies trade or exchange notes receivable.

Accepted Answer

A) True 
 B)False

Question 6

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

Accepted Answer

A) True 
 B)False

Question 7

Allowance for Doubtful Accounts is classified as a(n) ______ account and has a normal ______ balance.

Accepted Answer

A) stockholders' equity, credit 
B) contra asset, debit 
C) stockholders' equity, debit 
D) contra asset, credit 
A) stockholders' equity, credit 
B) contra asset, debit 
C) stockholders' equity, debit 
D) contra asset, credit

Question 8

Journalize the following transactions of Upton Drugs:

Accepted Answer

The answer of Journalize the following transactions of Upton Drugs:...

Question 9

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250. The credit sales for the period total $500,000. If the company estimates uncollectible accounts at 1% of credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750.

Accepted Answer

A) True 
 B)False

Question 10

Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method is most often used by small companies with few receivables.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Accepted Answer

The answer of Match each description to the appropriate term...

Question 11

For each of the following notes receivable held by Christensen Company determine the interest revenue to be reported on the income statements for the year ended December 31. Round answers to nearest whole dollar.

Accepted Answer

The answer of For each of the following notes receivable...

Question 12

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Accepted Answer

A) $29,500 
B) $34,500 
C) $32,000 
D) cannot be determined 
A) $29,500 
B) $34,500 
C) $32,000 
D) cannot be determined

Question 13

The receivable that is usually evidenced by a formal, written instrument of credit is a(n)

Accepted Answer

A) trade receivable 
B) note receivable 
C) accounts receivable 
D) income tax receivable 
A) trade receivable 
B) note receivable 
C) accounts receivable 
D) income tax receivable

Question 14

Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12 the company receives a $550 check from Chad Thomas in settlement of Thomas's $1,100 outstanding accounts receivable. Due to Thomas's failing health he is closing his company and is expecting to make no further payments to Discount Mart. Journalize this declaration.

Accepted Answer

The answer of Discount Mart utilizes the allowance method of...

Question 15

When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

Accepted Answer

A) True 
 B)False

Question 16

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

Accepted Answer

A) Uncollectible Accounts Receivable 
B) Accounts Receivable 
C) Allowance for Doubtful Accounts 
D) Bad Debt Expense 
A) Uncollectible Accounts Receivable 
B) Accounts Receivable 
C) Allowance for Doubtful Accounts 
D) Bad Debt Expense

Question 17

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 18

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

Accepted Answer

A) debit Cash, $6,120; credit Notes Receivable, $6,120 
B) debit Notes Receivable, $6,120; credit Accounts Receivable, $6,000; credit Interest Receivable, $120 
C) debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060 
D) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120 
A) debit Cash, $6,120; credit Notes Receivable, $6,120 
B) debit Notes Receivable, $6,120; credit Accounts Receivable, $6,000; credit Interest Receivable, $120 
C) debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060 
D) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120

Question 19

Which of the following receivables would not be classified as an "other receivable"?

Accepted Answer

A) advance to an employee 
B) interest receivable 
C) refundable income tax 
D) notes receivable 
A) advance to an employee 
B) interest receivable 
C) refundable income tax 
D) notes receivable

Question 20

The following information was taken from the books of Olmeck, Inc.   (a) Determine the accounts receivable turnover for Year 1 and Year 2.​
(b) Determine the number of days' sales in receivables for Year 1 and Year 2.​
(c) The industry average for the accounts receivable turnover is 8.0. How does Olmeck, Inc. compare?

Accepted Answer

(a) Year 1: $956,000 ÷ [($120,500 + $110

Exam 8: Receivables

Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account

Discuss the similarities and differences between accounts receivable, notes receivable, and other receivables.

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Trade receivables occur when two companies trade or exchange notes receivable.

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

Allowance for Doubtful Accounts is classified as a(n) ______ account and has a normal ______ balance.

Journalize the following transactions of Upton Drugs:

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method is most often used by small companies with few receivables. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method

For each of the following notes receivable held by Christensen Company determine the interest revenue to be reported on the income statements for the year ended December 31. Round answers to nearest whole dollar.

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

The receivable that is usually evidenced by a formal, written instrument of credit is a(n)

When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

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?

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

Which of the following receivables would not be classified as an "other receivable"?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Support Department and Joint Cost Allocation

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

Investments

Filters

Allowance for Doubtful Accounts is classified as a(n) account and has a normal balance.