Question 1

When the allowance method for accounting for uncollectible receivables is used,net income is reduced when a specific receivable is written off.

Accepted Answer

A) True 
 B)False  False

Question 2

​Which statement is not true?

Accepted Answer

A)  ​Current assets are normally reported in order of their liquidity. 
B)  ​Disclosures related to receivables are reported on the financial statement notes. 
C)  ​Cash and cash equivalents are the first items reported under current assets. 
D)  ​All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section. 
A)  ​Current assets are normally reported in order of their liquidity. 
B)  ​Disclosures related to receivables are reported on the financial statement notes. 
C)  ​Cash and cash equivalents are the first items reported under current assets. 
D)  ​All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section. D

Question 3

Indications that an account may be uncollectible include all of the following except

Accepted Answer

A)  ​​the customer closes its business 
B)  the customer is making small but regular payments 
C)  ​the customer files for bankruptcy 
D)  ​the customer cannot be located 
A)  ​​the customer closes its business 
B)  the customer is making small but regular payments 
C)  ​the customer files for bankruptcy 
D)  ​the customer cannot be located B

Question 4

At the end of the current year,Accounts Receivable has a balance of $90,000; Allowance for Doubtful Accounts has a credit balance of $850; and sales for the year total $300,000.Bad debt expense is estimated at 2.5% of sales.
​
Determine (a)the amount of the adjusting entry for uncollectible accounts; (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

The answer of At the end of the current year,Accounts...

Question 5

Journalize the following transactions using the allowance method of accounting for uncollectible receivables.
​
April 1 Sold merchandise on account to Jim Dobbs,$7,200.The cost of the merchandise is $5,400.
​
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.
​
Oct.11 Reinstated the account of Jim Dobbs and received cash in full payment.

Accepted Answer

The answer of Journalize the following transactions using the allowance...

Question 6

The direct write-off method records bad debt expense when an account is determined to be uncollectible.​

Accepted Answer

A) True 
 B)False

Question 7

In accounting for uncollectible receivables,the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?

Accepted Answer

A)  direct write-off method 
B)  percentage of sales method 
C)  analysis of receivables method 
D)  both percentage of sales and analysis of receivables methods 
A)  direct write-off method 
B)  percentage of sales method 
C)  analysis of receivables method 
D)  both percentage of sales and analysis of receivables methods

Question 8

A disadvantage of factoring is that the company selling its receivables immediately receives cash.

Accepted Answer

A) True 
 B)False

Question 9

On the basis of the following data related to assets due within one year for Webb Co.,prepare a partial balance sheet in good form at December 31.Show total current assets.

Accepted Answer

The answer of On the basis of the following data...

Question 10

The amount of the promissory note plus the interest earned on the due date is called the

Accepted Answer

A)  interest value 
B)  maturity value 
C)  face value 
D)  issuance value 
A)  interest value 
B)  maturity value 
C)  face value 
D)  issuance value

Question 11

Journalize the following transactions in the accounts of Simmons Company:
​
Mar.1 Received a $60,000,60-day,6% note dated March 1 from Bynum Company on account.
Mar.18 Received a $25,000,60-day,9% note dated March 18 from Solo Company on account.
Apr.30 The note dated March 1 from Bynum Company is dishonored,and the customer's account is charged for the note,including interest.
May 17 The note dated March 18 from Solo Company is dishonored,and the customer's account is charged for the note,including interest.
July 29 Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days at 8% on the total amount debited to Bynum Company on April 30.
Aug.23 Wrote off against the allowance account the amount charged to Solo Company on May 17 for the dishonored note dated March 18.

Accepted Answer

The answer of Journalize the following transactions in the accounts...

Question 12

At the end of the current year,Accounts Receivable has a balance of $700,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $3,500,000.Bad debt expense is estimated at 1 / 2 of 1% of net sales.
​
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

The answer of At the end of the current year,Accounts...

Question 13

When accounting for uncollectible receivables and using the percentage of sales method,the matching principle is violated.

Accepted Answer

A) True 
 B)False

Question 14

At the end of a period (before adjustment),Allowance for Doubtful Accounts has a debit balance of $500.Credit sales for the period total $800,000.If bad debt expense is estimated at 1% of credit sales,the amount of bad debt expense to be recorded in the adjusting entry is $8,500.

Accepted Answer

A) True 
 B)False

Question 15

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 16

If the maker of a note fails to pay the debt on the due date,the note is said to be dishonored.

Accepted Answer

A) True 
 B)False

Question 17

Discuss the (a)focus and (b)financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.

Accepted Answer

(a)Bad debt expense is the focus of the

Question 18

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 19

Dalton Company uses the allowance method to account for uncollectible receivables.Dalton has determined that the Irish Company account is uncollectible.To write off this account,Dalton should debit

Accepted Answer

A)  Bad Debt Expense and credit Accounts Receivable 
B)  Bad Debt Expense and credit Allowance for Doubtful Accounts 
C)  Allowance for Doubtful Accounts and credit Accounts Receivable 
D)  Accounts Receivable and credit Allowance for Doubtful Accounts 
A)  Bad Debt Expense and credit Accounts Receivable 
B)  Bad Debt Expense and credit Allowance for Doubtful Accounts 
C)  Allowance for Doubtful Accounts and credit Accounts Receivable 
D)  Accounts Receivable and credit Allowance for Doubtful Accounts

Question 20

Allowance for Doubtful Accounts is classified as a(n)______ account and has a normal ______ balance. ​

Accepted Answer

A)  owners' equity,credit 
B)  contra asset,debit 
C)  owners' equity,debit 
D)  contra asset,credit 
A)  owners' equity,credit 
B)  contra asset,debit 
C)  owners' equity,debit 
D)  contra asset,credit

Exam 8: Receivables

When the allowance method for accounting for uncollectible receivables is used,net income is reduced when a specific receivable is written off.

​Which statement is not true?

Indications that an account may be uncollectible include all of the following except

The direct write-off method records bad debt expense when an account is determined to be uncollectible.​

In accounting for uncollectible receivables,the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?

A disadvantage of factoring is that the company selling its receivables immediately receives cash.

On the basis of the following data related to assets due within one year for Webb Co.,prepare a partial balance sheet in good form at December 31.Show total current assets.

The amount of the promissory note plus the interest earned on the due date is called the

When accounting for uncollectible receivables and using the percentage of sales method,the matching principle is violated.

At the end of a period (before adjustment),Allowance for Doubtful Accounts has a debit balance of $500.Credit sales for the period total $800,000.If bad debt expense is estimated at 1% of credit sales,the amount of bad debt expense to be recorded in the adjusting entry is $8,500.

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

If the maker of a note fails to pay the debt on the due date,the note is said to be dishonored.

Discuss the (a)focus and (b)financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.

Generally accepted accounting principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

Dalton Company uses the allowance method to account for uncollectible receivables.Dalton has determined that the Irish Company account is uncollectible.To write off this account,Dalton should debit

Allowance for Doubtful Accounts is classified as a(n)______ account and has a normal ______ balance. ​

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Filters

Which statement is not true?

The direct write-off method records bad debt expense when an account is determined to be uncollectible.

Allowance for Doubtful Accounts is classified as a(n) account and has a normal balance.