Question 1

When does an account become uncollectible?

Accepted Answer

A) when accounts receivable is converted into notes receivable 
B) when a discount is availed on notes receivable 
C) there is no general rule for when an account becomes uncollectible 
D) at the end of the fiscal year 
A) when accounts receivable is converted into notes receivable 
B) when a discount is availed on notes receivable 
C) there is no general rule for when an account becomes uncollectible 
D) at the end of the fiscal year

Question 2

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables,a major difference is that the direct write-off method

Accepted Answer

A) uses a percentage of sales method to estimate uncollectible accounts 
B) is used primarily by large companies with many receivables 
C) is used primarily by small companies with few receivables 
D) uses an allowance account 
A) uses a percentage of sales method to estimate uncollectible accounts 
B) is used primarily by large companies with many receivables 
C) is used primarily by small companies with few receivables 
D) uses an allowance account

Question 3

Journalize the following transactions for the Scott Company:
November 4 Received a $6,500,90-day,6% note from Michael Tim's in payment of his account.
December 31 Accrued interest on the Tim's note.
February 2 Received the amount due from Tim's on his note.

$\begin{array}{|l|l|l|l|l|}
\hline \text { Date } &{\text { Description }} & \begin{array}{c}
\text { Post. } \
\text { Ref. }
\end{array} & \text { Debit } & \text { Credit } \
\hline  \
\hline  \
\hline & & & & \
\hline  \
\hline  \
\hline & & & & \
\hline  \
\hline \
\hline  \
\hline  \
\hline
\end{array}$

Accepted Answer

$6,500 × 6% × 57/360

Question 4

A company uses the allowance method to account for uncollectible accounts receivables.When the firm writes off a specific customer's account receivable

Accepted Answer

A) total current assets are reduced 
B) total expenses for the period are increased 
C) net realizable value of accounts receivable increases 
D) there is no effect on total current assets or total expenses 
A) total current assets are reduced 
B) total expenses for the period are increased 
C) net realizable value of accounts receivable increases 
D) there is no effect on total current assets or total expenses

Question 5

To record estimated uncollectible receivables using the allowance method,the adjusting entry would be a

Accepted Answer

A) debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts 
B) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts 
C) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable 
D) debit to Loss on Credit Sales and a credit to Accounts Receivable 
A) debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts 
B) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts 
C) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable 
D) debit to Loss on Credit Sales and a credit to Accounts Receivable

Question 6

The Lowery Co.uses the direct write-off method of accounting for uncollectible accounts receivable.Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible.The entry to write off this account would be which of the following?

Accepted Answer

A) debit Allowance for Doubtful Accounts; credit Accounts Receivable 
B) debit Sales Returns and Allowance; credit Accounts Receivable 
C) debit Bad Debt Expense; credit Allowance for Doubtful Accounts 
D) debit Bad Debt Expense; credit Accounts Receivable 
A) debit Allowance for Doubtful Accounts; credit Accounts Receivable 
B) debit Sales Returns and Allowance; credit Accounts Receivable 
C) debit Bad Debt Expense; credit Allowance for Doubtful Accounts 
D) debit Bad Debt Expense; credit Accounts Receivable

Question 7

A partially competed aging of receivables schedule for Lindy Designs' is shown below.Calculate the amount that is estimated to be uncollectible.
a Determine the amount estimated to be uncollectible by completing the aging of receivables schedule.Round calculations to the nearest dollar.
a $  \quad $ $  \quad $ $  \quad $ $  \quad $ $  \quad $ $  \quad $$  \quad $$  \quad $$  \quad $ $  \quad $ $  \quad $ $  \quad $ $\text { Est Uncollectible Accts }$$\quad   $
$\begin{array}{|l|r|r|r|}
\hline \text { Age Interval } & \text { Balance } & \text { \quad Percentage } & \text { \quad Amount: } \
\hline \text { Not past due } & 550,000 & 2.50 \% \
\hline 1 \sim 30 \text { days past due } & 96,500 & 4.00 \% \
\hline 31 \sim 60 \text { days past due } & 43,750 & 9.50 \% \
\hline 61 \sim 90 \text { days past due } & 22,250 & 16.00 \% \
\hline 91 \sim 180 \text { days past due } & 5,600 & 31.00 \% \
\hline 181 \sim 365 \text { days past due } & 3,100 & 60.00 \% \
\hline \text { Over } 365 \text { days past due } & 1,250 & 95.00 \% \
\hline \text { Total } & \underline{722.450} & \
\hline
\end{array}$ b If the Allowance for Doubtful Accounts has a credit balance of $9,700,record the adjusting entry for
the bad debt expense for the year.
c If the Allowance for Doubtful Accounts has a debit balance of $9,700,record the adjusting entry for the bad debt expense for the year.

Accepted Answer

None

Question 8

The maturity value of a $40,000,9%,40-day note receivable dated July 3 is

Accepted Answer

A) $40,000 
B) $40,400 
C) $43,600 
D) $44,000 
A) $40,000 
B) $40,400 
C) $43,600 
D) $44,000

Question 9

Under the allowance method,when a year-end adjustment is made for estimated uncollectible accounts

Accepted Answer

A) liabilities decrease 
B) net income is unchanged 
C) total assets are unchanged 
D) total assets decrease 
A) liabilities decrease 
B) net income is unchanged 
C) total assets are unchanged 
D) total assets decrease

Question 10

The receivable that is usually evidenced by a formal,written instrument of credit is an

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 11

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible.The Allowance for Doubtful Accounts has a debit balance of $110.The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

Accepted Answer

A) $110 
B) $640 
C) $530 
D) $750 
A) $110 
B) $640 
C) $530 
D) $750

Question 12

At the end of the current year,Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000.An analysis of receivables estimates uncollectible receivables as $25,000. Determine the net realizable value of accounts receivable after adjustment.Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts.

Accepted Answer

A) $550,000 
B) $544,500 
C) $525,000 
D) $575,000 
A) $550,000 
B) $544,500 
C) $525,000 
D) $575,000

Question 13

The party promising to pay a note at maturity is the maker.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A debit balance in the Allowance for Doubtful Accounts

Accepted Answer

A) is the normal balance for that account 
B) indicates that actual bad debt write-offs have been less than what was estimated 
C) cannot occur if the percentage of receivables method of estimating bad debts is used 
D) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts 
A) is the normal balance for that account 
B) indicates that actual bad debt write-offs have been less than what was estimated 
C) cannot occur if the percentage of receivables method of estimating bad debts is used 
D) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts

Question 16

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case.
a. Credit balance of $300 in Allowance for Doubtful Accounts just prior to adjustment.Analysis of Accounts Receivable indicates uncollectible receivables of $8,500.
b. Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment.Uncollectible receivables are estimated at 2% of credit sales,which totaled $1,000,000 for the year.

Accepted Answer

a. Amount added: $8,

Question 17

On August 1,Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company.The terms of the note were $20,000 face value and 6% interest.On October 30,the journal entry to record the collection of the note should include a

Accepted Answer

A) credit to Notes Receivable for $20,300 
B) debit to Interest Receivable for $300 
C) credit to Interest Revenue for $300 
D) debit to Notes Receivable for $20,000 
A) credit to Notes Receivable for $20,300 
B) debit to Interest Receivable for $300 
C) credit to Interest Revenue for $300 
D) debit to Notes Receivable for $20,000

Question 18

Although Allowance for Doubtful Accounts normally has a credit balance,it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 19

At the end of the current year,Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000.An analysis of receivables estimates uncollectible receivables as $25,000.
Determine a the amount of the adjusting entry for bad debt expense; b the adjusted balances of Accounts Receivable,Allowance for Doubtful Accounts,and Bad Debt Expense; and c the net realizable value of accounts receivable.

Accepted Answer

None

Question 20

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

Accepted Answer

A) True 
 B)False

When does an account become uncollectible?

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables,a major difference is that the direct write-off method

Journalize the following transactions for the Scott Company: November 4 Received a $6,500,90-day,6% note from Michael Tim's in payment of his account. December 31 Accrued interest on the Tim's note. February 2 Received the amount due from Tim's on his note. Date Description Post. Ref. Debit Credit

A company uses the allowance method to account for uncollectible accounts receivables.When the firm writes off a specific customer's account receivable

To record estimated uncollectible receivables using the allowance method,the adjusting entry would be a

The Lowery Co.uses the direct write-off method of accounting for uncollectible accounts receivable.Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible.The entry to write off this account would be which of the following?

The maturity value of a $40,000,9%,40-day note receivable dated July 3 is

Under the allowance method,when a year-end adjustment is made for estimated uncollectible accounts

The receivable that is usually evidenced by a formal,written instrument of credit is an

The party promising to pay a note at maturity is the maker.

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

A debit balance in the Allowance for Doubtful Accounts

On August 1,Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company.The terms of the note were $20,000 face value and 6% interest.On October 30,the journal entry to record the collection of the note should include a

Although Allowance for Doubtful Accounts normally has a credit balance,it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley,internal Control,and Cash

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 8: Receivables

When does an account become uncollectible?

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables,a major difference is that the direct write-off method

Journalize the following transactions for the Scott Company: November 4 Received a $6,500,90-day,6% note from Michael Tim's in payment of his account. December 31 Accrued interest on the Tim's note. February 2 Received the amount due from Tim's on his note. Date Description Post. Ref. Debit Credit

A company uses the allowance method to account for uncollectible accounts receivables.When the firm writes off a specific customer's account receivable

To record estimated uncollectible receivables using the allowance method,the adjusting entry would be a

The Lowery Co.uses the direct write-off method of accounting for uncollectible accounts receivable.Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible.The entry to write off this account would be which of the following?

The maturity value of a $40,000,9%,40-day note receivable dated July 3 is

Under the allowance method,when a year-end adjustment is made for estimated uncollectible accounts

The receivable that is usually evidenced by a formal,written instrument of credit is an

The party promising to pay a note at maturity is the maker.

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

A debit balance in the Allowance for Doubtful Accounts

On August 1,Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company.The terms of the note were $20,000 face value and 6% interest.On October 30,the journal entry to record the collection of the note should include a

Although Allowance for Doubtful Accounts normally has a credit balance,it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley,internal Control,and Cash

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters