Question 1

The estimated loss from uncollectible accounts can be based on the net credit sales for the year or the-------- balance at the end of the year.

Accepted Answer

The answer of The estimated loss from uncollectible accounts can...

Question 2

On April 22, 2019, Raymond Repair Services Company received a check for $220 from Caroline Smith, whose $380 account was written off on January 15. In the accompanying letter, Smith apologized and said she probably would not be unable to pay any of the remaining balance. Prepare the general journal entry necessary. (Assume the firm uses the direct charge-off method. Also assume that the entry in the cash receipts journal has already been made.)

Accepted Answer

The answer of On April 22, 2019, Raymond Repair Services...

Question 3

Which of the following statements is not correct?

Accepted Answer

A) The adjusting entry to record the estimated loss from uncollectible accounts includes a credit to Accounts Receivable. 
B) Losses from uncollectible accounts can be estimated by analyzing sales or accounts receivable. 
C) The allowance method involves anticipating losses from uncollectible accounts by recognizing an expense for these losses before the actual accounts are written off. 
D) The balance of Uncollectible Accounts Expense appears among the operating expenses on the income statement. 
A) The adjusting entry to record the estimated loss from uncollectible accounts includes a credit to Accounts Receivable. 
B) Losses from uncollectible accounts can be estimated by analyzing sales or accounts receivable. 
C) The allowance method involves anticipating losses from uncollectible accounts by recognizing an expense for these losses before the actual accounts are written off. 
D) The balance of Uncollectible Accounts Expense appears among the operating expenses on the income statement.

Question 4

On December 31, 2019, prior to adjustments, Accounts Receivable has a debit balance of $256,000 and the Allowance for Doubtful Accounts has a debit balance of $1,600. The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year. The amount of the adjusting entry needed to record the estimated losses from uncollectible accounts is:

Accepted Answer

A) $12,800 
B) $12,100 
C) $14,400 
D) $11,200 
A) $12,800 
B) $12,100 
C) $14,400 
D) $11,200

Question 5

On December 31, prior to adjustments, the balance of Accounts Receivable is $28,000 and Allowance for Doubtful Accounts has a debit balance of $200. The firm estimates its losses from uncollectible accounts to be 5.5% of accounts receivable at the end of the year. The adjusting entry needed to record the estimated losses from uncollectible accounts is

Accepted Answer

A) $200. 
B) $1,540. 
C) $1,340. 
D) $1,740. 
A) $200. 
B) $1,540. 
C) $1,340. 
D) $1,740.

Question 6

A firm reported net credit sales of $355,000 for the year and an Accounts Receivable balance of
$20,000 at year-end. Prior to adjustments, Allowance for Doubtful Accounts has a debit balance of
$250. The firm estimates its losses from uncollectible accounts to be one-half of 1 percent of net credit sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

Accepted Answer

A) $1,775. 
B) $2,025. 
C) $1,525. 
D) $3,550. 
A) $1,775. 
B) $2,025. 
C) $1,525. 
D) $3,550.

Question 7

Uncollectible Accounts Expense is classified as

Accepted Answer

A) a Contra Asset on the Balance Sheet. 
B) a Liability on the Balance Sheet. 
C) a Contra Expense on the Income Statement. 
D) an Expense on the Income Statement. 
A) a Contra Asset on the Balance Sheet. 
B) a Liability on the Balance Sheet. 
C) a Contra Expense on the Income Statement. 
D) an Expense on the Income Statement.

Question 8

Allowance for Doubtful Accounts is a liability account.

Accepted Answer

A) True 
 B)False

Question 9

The Travel-Right Company uses the allowance method to provide for losses from uncollectible accounts. Record the following selected transactions on page 5 of a general journal, assuming the company also uses a cash receipts journal. Omit descriptions.
 
Dec. 31 Recorded an adjusting entry for the estimated loss from uncollectible accounts for 2019. The estimate is based on 0.5 percent of total credit sales. The total of the credit sales for 2019 was $260,000. Allowance for Doubtful Accounts has a credit balance of $175.
2020
Apr. 15 Wrote off the account of Brandon Reed, amounting to $650, as uncollectible. Nov. 20 Received a check for $650 from Brandon Reed in payment of his account,
which was written off on April 15.
Dec. 31 Recorded an adjusting entry for the estimated loss from uncollectible accounts for 2020. The estimate is based on 0.5 percent of total credit sales. The total of the credit sales for 2020 was $224,000. Allowance for Doubtful Accounts has a debit balance of $200.

Accepted Answer

The answer of The Travel-Right Company uses the allowance method...

Question 10

Allowance for Doubtful Accounts may, at times, have a debit balance.

Accepted Answer

A) True 
 B)False

Question 11

When the estimate of the losses from uncollectible accounts is based on the aging method, the primary concern is proper valuation of the accounts receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

The practice of estimating losses from uncollectible accounts before specific accounts become uncollectible is referred to as the ________ method.

Accepted Answer

The answer of The practice of estimating losses from uncollectible...

Question 13

The allowance method may be used to record bad debt losses for income tax purposes.

Accepted Answer

A) True 
 B)False

Question 14

The balance of Allowance for Doubtful Accounts is added to the balance of Accounts Receivable on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

Match between columns
                        Premises: A method of recording uncollectible accounts that estimates losses from uncollectible accounts and charges them to expense in the period when the sales are recorded
Classifying accounts receivable balances according to how long they have been outstanding
Any account whose balance is revalued or reappraised in light of reasonable expectations
A method of recording uncollectible accounts as they occur

Accepted Answer

The Answer of Direct charge-off method and Valuation account and is...

Question 16

On December 31, prior to adjustments, the balance of Accounts Receivable is $28,000 and Allowance for Doubtful Accounts has a debit balance of $200. The firm estimates its losses from uncollectible accounts to be 5.5% of accounts receivable at the end of the year. The balance is Allowance for Doubtful Accounts after adjustment is

Accepted Answer

A) $1,740. 
B) $1,340. 
C) $200. 
D) $1,540. 
A) $1,740. 
B) $1,340. 
C) $200. 
D) $1,540.

Question 17

Nigel Lighting uses the direct charge-off method of recording bad debts. On Sept. 4, the $300 account balance of Louis Blue was charged off. However, on November 15, Blue paid $70 of the amount previously written off. The entry to record the payment from Blue would include:

Accepted Answer

A) debit Accounts Receivable $300; credit Uncollectible Account Expense $300 
B) debit Cash $70; credit Accounts Receivable $70 
C) debit Allowance for Doubtful Accounts $70; credit Accounts Receivable $70 
D) debit Uncollectible Account Expense $70; credit Cash $70 
A) debit Accounts Receivable $300; credit Uncollectible Account Expense $300 
B) debit Cash $70; credit Accounts Receivable $70 
C) debit Allowance for Doubtful Accounts $70; credit Accounts Receivable $70 
D) debit Uncollectible Account Expense $70; credit Cash $70

Question 18

If the direct charge-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) Accounts Receivable 
B) Allowance for Doubtful Accounts 
C) Uncollectible Accounts Expense 
D) Uncollectible Accounts Payable 
A) Accounts Receivable 
B) Allowance for Doubtful Accounts 
C) Uncollectible Accounts Expense 
D) Uncollectible Accounts Payable

Question 19

Millie's Draperies uses the allowance method of recording bad debts. On June 13, the company concluded that the $200 account balance of Jane Murphy should be written off as uncollectible. The entry to write off Murphy's account will be:

Accepted Answer

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

Question 20

At the end of the current year, the trial balance of Tracey's Consulting Services included the accounts and balances shown below. Credit sales were $90,000. Returns and allowances on these sales were
$1,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.4 percent of net credit sales.
   
1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Accepted Answer

The answer of At the end of the current year,...

Exam 15: Accounts Receivable and Uncollectible Accounts

The estimated loss from uncollectible accounts can be based on the net credit sales for the year or the-------- balance at the end of the year.

Which of the following statements is not correct?

Uncollectible Accounts Expense is classified as

Allowance for Doubtful Accounts is a liability account.

Allowance for Doubtful Accounts may, at times, have a debit balance.

When the estimate of the losses from uncollectible accounts is based on the aging method, the primary concern is proper valuation of the accounts receivable on the balance sheet.

The practice of estimating losses from uncollectible accounts before specific accounts become uncollectible is referred to as the ________ method.

The allowance method may be used to record bad debt losses for income tax purposes.

The balance of Allowance for Doubtful Accounts is added to the balance of Accounts Receivable on the balance sheet.

Nigel Lighting uses the direct charge-off method of recording bad debts. On Sept. 4, the $300 account balance of Louis Blue was charged off. However, on November 15, Blue paid $70 of the amount previously written off. The entry to record the payment from Blue would include:

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

Millie's Draperies uses the allowance method of recording bad debts. On June 13, the company concluded that the $200 account balance of Jane Murphy should be written off as uncollectible. The entry to write off Murphy's account will be:

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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