Question 1

The balance of the Allowance for Doubtful Accounts account is reported as

Accepted Answer

A) a deduction from Sales on the income statement. 
B) an addition to Accounts Receivable on the balance sheet. 
C) a deduction from Accounts Receivable on the balance sheet. 
D) an expense on the income statement. 
A) a deduction from Sales on the income statement. 
B) an addition to Accounts Receivable on the balance sheet. 
C) a deduction from Accounts Receivable on the balance sheet. 
D) an expense on the income statement.

Question 2

Allowance for Doubtful Accounts is classified as

Accepted Answer

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

Question 3

When there is a partial collection of a balance previously written off, the entry to record the reinstatement of the customer's account will be for the entire amount written off.

Accepted Answer

A) True 
 B)False

Question 4

At the end of the current year, the trial balance of Daniels' Furniture Store included the accounts and balances shown below. Credit sales were $180,000. Returns and allowances on these sales were
$2,000. 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,...

Question 5

Which of the following statements is not correct?

Accepted Answer

A) When using the direct charge-off method, there is no Allowance for Doubtful Accounts account. 
B) The use of the direct charge-off method of recording losses from uncollectible accounts usually results in the balance in the Accounts Receivable account being overstated. 
C) The direct charge-off method of recording losses from uncollectible accounts is the method required by Federal income tax laws. 
D) The direct charge-off method of recording losses from uncollectible accounts is an application of the matching principle. 
A) When using the direct charge-off method, there is no Allowance for Doubtful Accounts account. 
B) The use of the direct charge-off method of recording losses from uncollectible accounts usually results in the balance in the Accounts Receivable account being overstated. 
C) The direct charge-off method of recording losses from uncollectible accounts is the method required by Federal income tax laws. 
D) The direct charge-off method of recording losses from uncollectible accounts is an application of the matching principle.

Question 6

Under the Allowance Method of accounting for uncollectible accounts, a firm may base their estimate of uncollectible accounts on all of the following EXCEPT:

Accepted Answer

A) total accounts receivable at the end of the year 
B) total current assets as of the end of the year 
C) net credit sales for the year 
D) aging of accounts receivable at the end of the year 
A) total accounts receivable at the end of the year 
B) total current assets as of the end of the year 
C) net credit sales for the year 
D) aging of accounts receivable at the end of the year

Question 7

A firm reported sales of $300,000 for the year and Accounts Receivable has a balance of $20,000 at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

Accepted Answer

A) $1,500. 
B) $1,200. 
C) $3,000. 
D) $1,800. 
A) $1,500. 
B) $1,200. 
C) $3,000. 
D) $1,800.

Question 8

Millie's Draperies uses the allowance method of recording bad debts. On June 13, the $200 account balance of Jane Murphy was written off as uncollectible. However, on August 5, Murphy paid $80 of the amount previously written off. The entry to reinstate Jane Murphy's account would include:

Accepted Answer

A) debit Cash $80; credit Uncollectible Accounts Expense $80 
B) debit Accounts Receivable $200; credit Allowance for Doubtful Accounts $200 
C) debit Allowance for Doubtful Accounts $80; credit Cash $80 
D) debit Accounts Receivable $80; credit Allowance for Doubtful Accounts $80 
A) debit Cash $80; credit Uncollectible Accounts Expense $80 
B) debit Accounts Receivable $200; credit Allowance for Doubtful Accounts $200 
C) debit Allowance for Doubtful Accounts $80; credit Cash $80 
D) debit Accounts Receivable $80; credit Allowance for Doubtful Accounts $80

Question 9

At the end of the current year, the trial balance of Monique's Fashion Industries included the accounts and balances shown below. Credit sales were $6,400,000. Returns and allowances on these
sales were $57,200. Assume that the firm bases its estimate of the loss from uncollectible accounts on0.3 percent of net credit sales.
Accounts Receivable $ 650,000 Dr. Allowance for Doubtful Accounts 4,500 Cr.
Sales 7,000,000 Cr.
Sales Returns and Allowances 55,000 Dr.
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? (Round your answers to the nearest dollar.)

Accepted Answer

1. $19,028

Question 10

On December 31, prior to adjustment, Allowance for Doubtful Accounts has a debit balance of
$400. An analysis of the aging of the accounts receivable produces an estimate of $3,100 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is

Accepted Answer

A) $3,100. 
B) $2,700. 
C) $3,500. 
D) $400. 
A) $3,100. 
B) $2,700. 
C) $3,500. 
D) $400.

Question 11

The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to Allowance for Doubtful Accounts.

Accepted Answer

A) True 
 B)False

Question 12

On December 31, 2019, prior to adjustments, Accounts Receivable has a debit balance of $370,000 and the Allowance for Doubtful Accounts has a credit balance of $800. The firm estimates its losses from uncollectible accounts to be 3% of accounts receivable at the end of the year. The amount to be reported as Uncollectible Accounts Expense on the income statement for the year ending December 31, 2019, is

Accepted Answer

A) $10,300 
B) $12,700 
C) $11,100 
D) $11,900 
A) $10,300 
B) $12,700 
C) $11,100 
D) $11,900

Question 13

At the end of the current year, the trial balance of Cary's Craft Shop included the accounts and balances shown below. Credit sales were $290,000. Returns and allowances on these sales were
$4,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.3 percent of net credit sales.
Accounts Receivable $ 36,000 Dr. 
Allowance for Doubtful Accounts 1,000 Dr.
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,...

Question 14

On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of
$630. An analysis of the accounts receivable aging estimates $2,850 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is

Accepted Answer

A) $2,220. 
B) $3,480. 
C) $2,850. 
D) $630. 
A) $2,220. 
B) $3,480. 
C) $2,850. 
D) $630.

Question 15

On December 31, 2019, prior to adjustments, Accounts Receivable has a debit balance of $256,000 and the Allowance for Doubtful Accounts has a credit 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 balance in the Allowance for Doubtful Accounts after the adjusting entry for the estimated losses from uncollectible accounts is:

Accepted Answer

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

Question 16

Allowance for Doubtful Accounts has a credit balance of $3,600 immediately before the write-off of a $750 account receivable. The balance of Allowance for Doubtful Accounts immediately after the write-off is

Accepted Answer

A) $750 debit. 
B) $2,850 credit. 
C) $4,350 credit. 
D) $2,850 debit. 
A) $750 debit. 
B) $2,850 credit. 
C) $4,350 credit. 
D) $2,850 debit.

Question 17

Uncollectible Accounts Expense can be called Loss from Uncollectible Accounts.

Accepted Answer

A) True 
 B)False

Question 18

Common internal controls for accounts receivable would not include:

Accepted Answer

A) obtaining proper authorization for write-offs. 
B) sending invoices and monthly statements to customers. 
C) allowing all sales personnel to charge-off any accounts deemed uncollectible. 
D) developing procedures that ensure that all credit sales are recorded and customers' account are debited. 
A) obtaining proper authorization for write-offs. 
B) sending invoices and monthly statements to customers. 
C) allowing all sales personnel to charge-off any accounts deemed uncollectible. 
D) developing procedures that ensure that all credit sales are recorded and customers' account are debited.

Question 19

The experience of other firms in the same line of business may be used in estimating losses from uncollectible accounts for a new firm.

Accepted Answer

A) True 
 B)False

Question 20

On December 31, 2019, prior to adjustments, Accounts Receivable has a debit balance of $256,000 and the Allowance for Doubtful Accounts has a credit 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) $14,400 
C) $12,100 
D) $11,200 
A) $12,800 
B) $14,400 
C) $12,100 
D) $11,200

Exam 15: Accounts Receivable and Uncollectible Accounts

The balance of the Allowance for Doubtful Accounts account is reported as

Allowance for Doubtful Accounts is classified as

When there is a partial collection of a balance previously written off, the entry to record the reinstatement of the customer's account will be for the entire amount written off.

Which of the following statements is not correct?

Under the Allowance Method of accounting for uncollectible accounts, a firm may base their estimate of uncollectible accounts on all of the following EXCEPT:

Millie's Draperies uses the allowance method of recording bad debts. On June 13, the $200 account balance of Jane Murphy was written off as uncollectible. However, on August 5, Murphy paid $80 of the amount previously written off. The entry to reinstate Jane Murphy's account would include:

The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to Allowance for Doubtful Accounts.

On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $630. An analysis of the accounts receivable aging estimates $2,850 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is

Allowance for Doubtful Accounts has a credit balance of $3,600 immediately before the write-off of a $750 account receivable. The balance of Allowance for Doubtful Accounts immediately after the write-off is

Uncollectible Accounts Expense can be called Loss from Uncollectible Accounts.

Common internal controls for accounts receivable would not include:

The experience of other firms in the same line of business may be used in estimating losses from uncollectible accounts for a new firm.

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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