Question 1

A company uses the allowance method and expects not to collect $15,000 of sales.The journal entry to record the estimated bad debt is:

Accepted Answer

A)  $\begin{array} { | c | l l | } 
\hline \text { Allowance for Doubtful Accounts } & \$ 15,000 & \
\hline \text { Bad Debt Expense } & \$ 15,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | r | l l | } 
\hline\text { Allowance for Doubtful Accounts } & \$ 15,000 & \
\hline \text { Accounts Receivable } & \$ 15,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | l c | } 
\hline\text { Accounts Receivable } & \$ 15,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 15,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | l c | } 
\hline\text { Bad Debt Expense } & \$ 15,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 15,000 \
\hline
\end{array}$ 
A)  $\begin{array} { | c | l l | } 
\hline \text { Allowance for Doubtful Accounts } & \$ 15,000 & \
\hline \text { Bad Debt Expense } & \$ 15,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | r | l l | } 
\hline\text { Allowance for Doubtful Accounts } & \$ 15,000 & \
\hline \text { Accounts Receivable } & \$ 15,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | l c | } 
\hline\text { Accounts Receivable } & \$ 15,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 15,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | l c | } 
\hline\text { Bad Debt Expense } & \$ 15,000 \
\hline \text { Allowance for Doubtful Accounts } & \$ 15,000 \
\hline
\end{array}$

Question 2

Determine the estimated realizable (collectable)value:
Bad debts are estimated to be 3% of net sales.
 $\begin{array}{llcc}
  \text { Accounts receivable balance } &\$95,000  \
 \text { Allowance for bad debts balance (crebit) } &\$675\
 \text { Net Sales } &\$800,000\
\end{array}$

$ ________

Accepted Answer

The answer of Determine the estimated realizable (collectable)value:
Bad debts are...

Question 3

Prepare a partial balance sheet for the Meredith Company at December 31,200x,from the following information:
 $\begin{array} { l l } 
\text { Accounts Receivable } & \$ 7,500 \
\text { Allowance for Doubthul Accounts } & 300 \
\text { Ead Debt Expense } & 2,000 \
\text { Cash } & 12,006 \
\text { Merchandise Inventory } & 3,500
\end{array}$

Accepted Answer

The answer of Prepare a partial balance sheet for the...

Question 4

What type of account is an Allowance for Doubtful Accounts?

Accepted Answer

A) Asset 
B) Contra-asset 
C) Revenue 
D) Contra-revenue 
A) Asset 
B) Contra-asset 
C) Revenue 
D) Contra-revenue

Question 5

The Allowance account is a contra-liability account.

Accepted Answer

A) True 
 B)False

Question 6

The adjustment for bad debts using the percentage of receivables ignored the debit balance in the Allowance account.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 7

Harry's Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible.Barber calculates Bad Debts Expense using the:

Accepted Answer

A) income statement approach. 
B) direct write-off method. 
C) balance sheet approach. 
D) aging the Accounts Receivable approach. 
A) income statement approach. 
B) direct write-off method. 
C) balance sheet approach. 
D) aging the Accounts Receivable approach.

Question 8

After having written off a customer under the direct write-off method,the account will be reopened when the customer:

Accepted Answer

A) sends the full amount to pay off the account. 
B) sends any amount to pay on their account. 
C) pays the collection bureau. 
D) none of the above 
A) sends the full amount to pay off the account. 
B) sends any amount to pay on their account. 
C) pays the collection bureau. 
D) none of the above

Question 9

Under the allowance method,Bad Debt Expense is recorded:

Accepted Answer

A) as an estimate. 
B) when an individual account is written off. 
C) several times during the year as needed. 
D) None of these answers is correct. 
A) as an estimate. 
B) when an individual account is written off. 
C) several times during the year as needed. 
D) None of these answers is correct.

Question 10

The two methods of accounting for uncollectible receivables are the direct write-off method and the:

Accepted Answer

A) equity method. 
B) allowance method. 
C) interest method. 
D) cost method. 
A) equity method. 
B) allowance method. 
C) interest method. 
D) cost method.

Question 11

Estimating Bad Debts Expense is an example of:

Accepted Answer

A) recording accrued expense. 
B) the matching principle. 
C) the balance sheet approach. 
D) recording accrued sales. 
A) recording accrued expense. 
B) the matching principle. 
C) the balance sheet approach. 
D) recording accrued sales.

Question 12

Gross Accounts Receivable is $10,000.Allowance for Doubtful Accounts has a credit balance of $200.Net sales for the year are $150,000.In the past,2% of sales had proved uncollectible,and an aging of the receivables indicates $1,200 is doubtful.Under the balance sheet approach,Bad Debts Expense for the year is:

Accepted Answer

A) $1,000. 
B) $3,000. 
C) $2,800. 
D) $1,200. 
A) $1,000. 
B) $3,000. 
C) $2,800. 
D) $1,200.

Question 13

Sylvia's,Inc.,decreases Allowance for Doubtful Accounts $700 at year-end.As a result:

Accepted Answer

A) net assets decrease. 
B) net income is unchanged. 
C) net assets increase. 
D) net realizable value assets decreases. 
A) net assets decrease. 
B) net income is unchanged. 
C) net assets increase. 
D) net realizable value assets decreases.

Question 14

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.
-$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column } 2 & \text { Column } 3 & \text { Column } 4 \
\hline \text { Bad debts } & & & & \
\text { recovered } & & & & \
\hline
\end{array}$

Accepted Answer

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

Question 15

If the allowance 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) Allowance for Doubtful Accounts 
B) Bad Debt Expense 
C) Accounts Payable 
D) Bad Debts Recovered 
A) Allowance for Doubtful Accounts 
B) Bad Debt Expense 
C) Accounts Payable 
D) Bad Debts Recovered

Question 16

When a year-end adjustment is made for estimated bad debts:

Accepted Answer

A) net income is increased. 
B) liabilities increase. 
C) net assets increase. 
D) net assets decrease. 
A) net income is increased. 
B) liabilities increase. 
C) net assets increase. 
D) net assets decrease.

Question 17

Town and Country Saddle learns the account receivable for a customer is uncollectible.The journal entry under the allowance method to write-off an account is to:

Accepted Answer

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

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
-Collected from a customer previously written off under the direct write off method.
Debit account ________ Credit account ________

Accepted Answer

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

Question 19

Determine the amount of the adjustment for bad debts given:
Bad debts are estimated to be 8% of sales
 $\begin{array}{llcc}
  \text { Accounts receivable balance } &\$370,000  \
 \text { Allowance for bad debts balance (debit) } &\$900\
 \text { Net Sales } &\$200,000\
\end{array}$

$ ________

Accepted Answer

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

Question 20

At December 31,200x,Brooke's Horse Stable unadjusted Allowance for Doubtful Accounts showed a debit balance of $432.An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000.The year-end adjusting entry for Bad Debts Expense:

Accepted Answer

A) includes a debit to the Allowance account for $568. 
B) includes a credit to the Allowance account for $42. 
C) includes a debit to the Allowance account for $822. 
D) includes a credit to the Allowance account for $1,432. 
A) includes a debit to the Allowance account for $568. 
B) includes a credit to the Allowance account for $42. 
C) includes a debit to the Allowance account for $822. 
D) includes a credit to the Allowance account for $1,432.

Exam 13: Accounting for Bad Debts

A company uses the allowance method and expects not to collect $15,000 of sales.The journal entry to record the estimated bad debt is:

Determine the estimated realizable (collectable)value: Bad debts are estimated to be 3% of net sales. Accounts receivable balance \9 5,000 Allowance for bad debts balance (crebit) \6 75 Net Sales \8 00,000 $ ________

Prepare a partial balance sheet for the Meredith Company at December 31,200x,from the following information: Accounts Receivable \ 7,500 Allowance for Doubthul Accounts 300 Ead Debt Expense 2,000 Cash 12,006 Merchandise Inventory 3,500

What type of account is an Allowance for Doubtful Accounts?

The Allowance account is a contra-liability account.

The adjustment for bad debts using the percentage of receivables ignored the debit balance in the Allowance account.This error would cause:

Harry's Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible.Barber calculates Bad Debts Expense using the:

After having written off a customer under the direct write-off method,the account will be reopened when the customer:

Under the allowance method,Bad Debt Expense is recorded:

The two methods of accounting for uncollectible receivables are the direct write-off method and the:

Estimating Bad Debts Expense is an example of:

Sylvia's,Inc.,decreases Allowance for Doubtful Accounts $700 at year-end.As a result:

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

When a year-end adjustment is made for estimated bad debts:

Town and Country Saddle learns the account receivable for a customer is uncollectible.The journal entry under the allowance method to write-off an account is to:

Determine the amount of the adjustment for bad debts given: Bad debts are estimated to be 8% of sales Accounts receivable balance \3 70,000 Allowance for bad debts balance (debit) \9 00 Net Sales \2 00,000 $ ________

At December 31,200x,Brooke's Horse Stable unadjusted Allowance for Doubtful Accounts showed a debit balance of $432.An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000.The year-end adjusting entry for Bad Debts Expense:

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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