Question 1

When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected, the correct entry would be:

Accepted Answer

A) debit Bad Debt Expense and credit Accounts Receivable. 
B) debit Accounts Receivable and credit Bad Debt Expense. 
C) debit Cash and credit Accounts Receivable. 
D) dependent on the period in which the cash was collected. 
A) debit Bad Debt Expense and credit Accounts Receivable. 
B) debit Accounts Receivable and credit Bad Debt Expense. 
C) debit Cash and credit Accounts Receivable. 
D) dependent on the period in which the cash was collected. D

Question 2

Stacy's Service Bureau is able to collect an amount previously written off last year under the direct method. The journal entry will:

Accepted Answer

A) decrease Bad Debts Expense. 
B) increase Bad Debts Recovered. 
C) decrease Accounts Receivable. 
D) decrease Cash. 
A) decrease Bad Debts Expense. 
B) increase Bad Debts Recovered. 
C) decrease Accounts Receivable. 
D) decrease Cash. B

Question 3

The two methods of accounting for uncollectible receivables are the allowance method and the:

Accepted Answer

A) cost method. 
B) interest method. 
C) direct write-off method. 
D) equity method. 
A) cost method. 
B) interest method. 
C) direct write-off method. 
D) equity method. C

Question 4

Use the account code numbers to identify how the following transactions would be journalized.
  
-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 5

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...

Question 6

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

Accepted Answer

A) Bad Debts Recovered 
B) Bad Debts Expense 
C) Accounts Receivable 
D) Interest Expense 
A) Bad Debts Recovered 
B) Bad Debts Expense 
C) Accounts Receivable 
D) Interest Expense

Question 7

Myra's balance of Accounts Receivable is $4,000. The balance of the Allowance account is $600 credit. Myra writes off a $150 uncollectible account. The effect on net realizable value of the receivables is that it:

Accepted Answer

A) reduces net realizable value. 
B) increases net realizable value. 
C) is unchanged. 
D) is undeterminable. 
A) reduces net realizable value. 
B) increases net realizable value. 
C) is unchanged. 
D) is undeterminable.

Question 8

The income statement approach estimates a percentage of sales that is uncollectible.

Accepted Answer

A) True 
 B)False

Question 9

CJM Sales uses the direct write-off method in accounting for uncollectible accounts.
Record the following transactions in general journal form.

Accepted Answer

The answer of CJM Sales uses the direct write-off method...

Question 10

The net realizable value of a company's Accounts Receivables is:

Accepted Answer

A) increased at the time of a specific write-off. 
B) decreased at the time of a specific write-off. 
C) unchanged at the time of a specific write-off. 
D) the guaranteed amount the company will collect from its customers. 
A) increased at the time of a specific write-off. 
B) decreased at the time of a specific write-off. 
C) unchanged at the time of a specific write-off. 
D) the guaranteed amount the company will collect from its customers.

Question 11

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 debit balance of $800. Journalize the recording of the bad debt expense under the income statement approach if 0.8% of net credit sales is deemed uncollectible.

Accepted Answer

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

Question 12

Sigma reports net credit sales of $400,000. There is a credit balance of $1,000 in the Allowance for Doubtful Accounts. Uncollectible accounts are estimated to be 2.5% of net credit sales. Under the income statement approach, the adjusting entry would require a debit to Bad Debt Expense for:

Accepted Answer

A) $10,000. 
B) $9,000. 
C) $ 9,975. 
D) some other number. 
A) $10,000. 
B) $9,000. 
C) $ 9,975. 
D) some other number.

Question 13

Determine the estimated realizable (collectable)value:
Bad debts are estimated to be 1% of receivables
   $ ________

Accepted Answer

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

Question 14

Use the account code numbers to identify how the following transactions would be journalized.
  
-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 15

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 16

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 17

The adjustment for bad debts using the percentage of receivables ignored the credit 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 18

A debit balance in Allowance for Doubtful Accounts indicates the estimate for Bad Debts was too high.

Accepted Answer

A) True 
 B)False

Question 19

Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $200,000 and Allowance for Doubtful Accounts has a debit balance $20,000. What is the net realizable value of the accounts receivable?

Accepted Answer

A) $180,000 
B) $20,000 
C) $220,000 
D) $200,000 
A) $180,000 
B) $20,000 
C) $220,000 
D) $200,000

Question 20

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. What would be the adjusted balance of the Allowance account under the income statement approach?

Accepted Answer

A) $3,200 
B) $2,800 
C) $1,400 
D) $3,000 
A) $3,200 
B) $2,800 
C) $1,400 
D) $3,000

Exam 13: Accounting for Bad Debts

When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected, the correct entry would be:

Stacy's Service Bureau is able to collect an amount previously written off last year under the direct method. The journal entry will:

The two methods of accounting for uncollectible receivables are the allowance method and the:

Use the account code numbers to identify how the following transactions would be journalized. -Collected a partial payment from a bad debt under the allowance method. The account had been reinstated. Debit account ________ Credit account ________

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

Myra's balance of Accounts Receivable is $4,000. The balance of the Allowance account is $600 credit. Myra writes off a $150 uncollectible account. The effect on net realizable value of the receivables is that it:

The income statement approach estimates a percentage of sales that is uncollectible.

CJM Sales uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form.

The net realizable value of a company's Accounts Receivables is:

Sigma reports net credit sales of $400,000. There is a credit balance of $1,000 in the Allowance for Doubtful Accounts. Uncollectible accounts are estimated to be 2.5% of net credit sales. Under the income statement approach, the adjusting entry would require a debit to Bad Debt Expense for:

Determine the estimated realizable (collectable)value: Bad debts are estimated to be 1% of receivables $ ________

Use the account code numbers to identify how the following transactions would be journalized. -Reinstated an account previously written off under the allowance method. Debit account ________ Credit account ________

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:

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

A debit balance in Allowance for Doubtful Accounts indicates the estimate for Bad Debts was too high.

Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $200,000 and Allowance for Doubtful Accounts has a debit balance $20,000. What is the net realizable value of the accounts receivable?

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. What would be the adjusted balance of the Allowance account under the income statement 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

Filters

Use the account code numbers to identify how the following transactions would be journalized. -Collected a partial payment from a bad debt under the allowance method. The account had been reinstated. Debit account Credit account

Use the account code numbers to identify how the following transactions would be journalized. -Reinstated an account previously written off under the allowance method. Debit account Credit account