Question 1

San Francisco Tours collected $90 on an account that had been directly written off the previous year.The journal entry to record the transaction would include:

Accepted Answer

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

Question 2

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature.
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 & \text { Column } 4 \
\hline \text { Allowance for } & & & & \
\text { doubtful } & & & & \
\hline \text { accounts } & & & & \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following, identify in...

Question 3

The normal balance of the Allowance for Doubtful Accounts account is a debit.

Accepted Answer

A) True 
 B)False

Question 4

1 Fit City estimates it will collect $2,300 of the $2,425 owed by customers.The difference of $125 represents the:

Accepted Answer

A) Gross Accounts Receivable. 
B) Allowance for Doubtful Accounts. 
C) Net Realizable Value. 
D) Value of the Current Unpaid Receivables. 
A) Gross Accounts Receivable. 
B) Allowance for Doubtful Accounts. 
C) Net Realizable Value. 
D) Value of the Current Unpaid Receivables.

Question 5

No entry was recorded to reinstate a bad debt when making a collection.The allowance method is being used.This error would cause:

Accepted Answer

A) total assets to be overstated. 
B) total liabilities to be understated. 
C) net income to be understated. 
D) None of these are correct. 
A) total assets to be overstated. 
B) total liabilities to be understated. 
C) net income to be understated. 
D) None of these are correct.

Question 6

The current balance of Allowance for Doubtful Accounts is considered when calculating the current period's Bad Debts Expense under the following approach:

Accepted Answer

A) direct write-off approach. 
B) income statement approach. 
C) balance sheet approach. 
D) All of these answers are correct. 
A) direct write-off approach. 
B) income statement approach. 
C) balance sheet approach. 
D) All of these answers are correct.

Question 7

The adjusting entry for uncollectibles is based on an estimate.

Accepted Answer

A) True 
 B)False

Question 8

Under the accrual method of accounting,the allowance method is generally required for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 9

The Allowance for Doubtful Accounts may have a debit balance before adjustment.

Accepted Answer

A) True 
 B)False

Question 10

If the direct write-off method is used,the debit account to write off an uncollectible is:

Accepted Answer

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

Question 11

Joe's Auto Repair estimates that approximately 3% of net credit sales are uncollectible.Joe's calculates Bad Debts Expense using the:

Accepted Answer

A) direct write-off method. 
B) income statement method. 
C) gross method. 
D) balance sheet method. 
A) direct write-off method. 
B) income statement method. 
C) gross method. 
D) balance sheet method.

Question 12

Fit City estimates it will collect $2,300 of the $2,425 owed by customers.The estimated collectible amount is called:

Accepted Answer

A) the Bad Debts Allowance. 
B) the Net Realizable Value. 
C) the Allowance for Doubtful Accounts. 
D) the Gross Accounts Receivable. 
A) the Bad Debts Allowance. 
B) the Net Realizable Value. 
C) the Allowance for Doubtful Accounts. 
D) the Gross Accounts Receivable.

Question 13

The entry to adjust for bad debts was ignored.This error would cause:

Accepted Answer

A) total assets to be overstated. 
B) total liabilities to be understated. 
C) net income to be understated. 
D) None of these are correct. 
A) total assets to be overstated. 
B) total liabilities to be understated. 
C) net income to be understated. 
D) None of these are correct.

Question 14

Describe and contrast the procedures for estimating uncollectible accounts under the (a)income statement approach,(b)the balance sheet approach,and (c)the direct write-off approach.

Accepted Answer

(a) Under the income statement approach,

Question 15

Use the account code numbers to identify how the following transactions would be journalized.
[1]Cash
[2]Accounts Receivable
[3]Allowance for Doubtful Accounts
[4]Bad Debts Expense,
[5]Bad Debts Recovered
-Collected a partial payment from a bad debt under the allowance method.The account had been reinstated.
Debit account ________ Credit account ________

Accepted Answer

The answer of Use the account code numbers to identify...

Question 16

On December 31,2010,Paint Pros had a balance in Accounts Receivable of $15,000.Net credit sales for the year were $450,000.The Allowance for Doubtful Accounts has a credit balance of $900.Journalize the recording of the bad debt expense under the income statement approach if 2% of net credit sales is deemed uncollectible.

Accepted Answer

The answer of On December 31,2010,Paint Pros had a balance...

Question 17

When a customer's account is written off:

Accepted Answer

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

Question 18

Use the account code numbers to identify how the following transactions would be journalized.
[1]Cash
[2]Accounts Receivable
[3]Allowance for Doubtful Accounts
[4]Bad Debts Expense,
[5]Bad Debts Recovered
-Reinstated an account previously written off under the allowance method.
Debit account ________ Credit account ________

Accepted Answer

The answer of Use the account code numbers to identify...

Question 19

The aging of Accounts Receivable is an income statement approach.

Accepted Answer

A) True 
 B)False

Question 20

Bad Debts Expense is recorded in the year the sale was earned when using the income statement allowance approach.

Accepted Answer

A) True 
 B)False

Exam 13: Accounting for Bad Debts

San Francisco Tours collected $90 on an account that had been directly written off the previous year.The journal entry to record the transaction would include:

The normal balance of the Allowance for Doubtful Accounts account is a debit.

1 Fit City estimates it will collect $2,300 of the $2,425 owed by customers.The difference of $125 represents the:

No entry was recorded to reinstate a bad debt when making a collection.The allowance method is being used.This error would cause:

The current balance of Allowance for Doubtful Accounts is considered when calculating the current period's Bad Debts Expense under the following approach:

The adjusting entry for uncollectibles is based on an estimate.

Under the accrual method of accounting,the allowance method is generally required for financial reporting purposes.

The Allowance for Doubtful Accounts may have a debit balance before adjustment.

If the direct write-off method is used,the debit account to write off an uncollectible is:

Joe's Auto Repair estimates that approximately 3% of net credit sales are uncollectible.Joe's calculates Bad Debts Expense using the:

Fit City estimates it will collect $2,300 of the $2,425 owed by customers.The estimated collectible amount is called:

The entry to adjust for bad debts was ignored.This error would cause:

Describe and contrast the procedures for estimating uncollectible accounts under the (a)income statement approach,(b)the balance sheet approach,and (c)the direct write-off approach.

When a customer's account is written off:

The aging of Accounts Receivable is an income statement approach.

Bad Debts Expense is recorded in the year the sale was earned when using the income statement allowance approach.

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: The Conclusion of the Payroll Process

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, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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