Question 1

At the end of a period  (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts, and the amount estimated to be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

The accounts receivable turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

Accepted Answer

A) True 
 B)False

Question 4

A company may sell its receivables, but it still assumes the risk of uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 5

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of accounts receivable?

Accepted Answer

A)  $51,000 
B)  $289,000 
C)  $340,000 
D)  $391,000

Question 6

For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt Expense to be recorded, the balance in Allowance for Doubtful Accounts after adjustment at December 31, and the net realizable value of accounts receivable at December 31.
(a) Based on an analysis of Simmons Company's $380,000 balance in Accounts Receivable at December 31, it was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment.
(b) Blake Company had credit sales of $900,000 at year-end, an Accounts Receivable balance of $425,000 at December 31, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment. Blake estimates bad debt expense as ¾ of 1% of credit sales.
(c) Hidgon Inc. has a balance of $812,000 in Accounts Receivable at December 31. An analysis of those receivables shows $24,000 will probably not be collected. Before adjusting entries are prepared, Allowance for Doubtful Accounts has a debit balance of $750.

Accepted Answer

The answer of For each of the following scenarios, indicate...

Question 7

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

Accepted Answer

A)  a customer's account becomes past due 
B)  an account becomes bad and is written off 
C)  a sale is made 
D)  management estimates the amount of uncollectibles

Question 8

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.?
Apr. 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 direct...

Question 9

On the basis of the following data related to assets due within one year for Simons Co., prepare a partial balance sheet in good form at December 31. Show total current assets. $$\begin{array} { l r } 
\text { Cash } & \$ 56,000 \
\text { Accounts receivable } & 325,000 \
\text { Allowance for doubtful accounts } & 25,000 \
\text { Interest receivable } & 3,000 \
\text { Supplies } & 4,000 \
\text { Inventory } & 45,000 \
\text { Other current assets } & 10,000
\end{array}$$

Accepted Answer

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

Question 10

If the direct write-off 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)  Uncollectible Accounts Receivable 
B)  Accounts Receivable 
C)  Allowance for Doubtful Accounts 
D)  Bad Debt Expense

Question 11

The following journal entries would be used in one of the two methods of accounting for uncollectible receivables. Identify each.

(a)Bad Debt Expense900
Accounts Receivable-Billings900
(b)Allowance for Doubtful Accounts900
Accounts Receivable-Grover900

Accepted Answer

The answer of The following journal entries would be used...

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared? a. Cash 200
$\quad\quad\quad$Interest Revenue 200
b. Interest Receivable $\quad 800$
$\quad\quad\quad$Interest Revenue $\quad 800$
c. Interest Receivable 200
$\quad\quad\quad$Interest Revenue 200
d. Notes Receivable $\quad 40,000$
$\quad\quad\quad$Cash 40,000

Accepted Answer

The answer of Harper Company lends Hewell Company $40,000 on...

Question 14

(a) The aging of Torme Designs' accounts receivable is shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible.?? $$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \text { Estimated Uncollectible Accounts } } \
\begin{array} { | l | r | c | c | } 
\hline \text { Age Interval } & \text { Balance } & \text { Percentage } & \text { Amount } \
\hline \text { Not past due } & \$ 850,000 & 3.50 \% & \
\hline 1 - 30 \text { days past due } & 47,500 & 5.00 & \
\hline 31 - 60 \text { days past due } & 21,750 & 10.00 & \
\hline 61 - 90 \text { days past due } & 11,250 & 20.00 & \
\hline 91 - 180 \text { days past due } & 5,065 & 30.00 & \
\hline 181 - 365 \text { days past due } & 2,500 & 50.00 & \
\hline \text { Over } 365 \text { days past due } & \underline{1,145} & 95.00 & \
\hline \text { Total } & \underline{\mathbf { \$939,210 }} & & \
\hline
\end{array}$$ (b) If Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry forthe bad debt expense for the year.

Accepted Answer

The answer of (a) The aging of Torme Designs' accounts...

Question 15

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 16

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Accepted Answer

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

Question 17

Match each description to the appropriate term (a-i).
-A contra asset that represents the amount of estimated uncollectible receivables

Accepted Answer

A) Accounts receivable turnover 
B) Net realizable value 
C) Accounts receivable 
D) Aging the receivables 
E) Receivables
F)Direct write-off method
G)Allowance for doubtful accounts
H)Bad debt expense
I)Notes receivable

Question 18

Journalize the following transactions for Lucite Company.Nov. 14 Received a $4,800, 90-day, 9% note from Alan Albertson in payment of his account.Dec. 31 Accrued interest on the Albertson note.Feb. 12 Received the amount due from Albertson on his note. $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Date } & \text { Description } & \begin{array} { c } 
\text { Post. } \
\text { Ref. }
\end{array} & \text { Debit } & \text { Credit } \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Journalize the following transactions for Lucite Company.Nov....

Question 19

Notes or accounts receivable that result from sales transactions are often called

Accepted Answer

A)  nontrade receivables 
B)  trade receivables 
C)  merchandise receivables 
D)  sales receivables

Question 20

For each of the following notes receivables held by Christensen Company, determine the interest revenue to be reported on the income statements for the year ended December 31. Round answers to the nearest whole dollar. $$\begin{array} { | l | r | c | r | r | } 
\hline \text { Date } & \text { Face } & \text { Rate } & \text { Term } & \text { Interest Revenue } \
\hline \text { Aug. } 8 & \$ 45,000 & 7 \% & 45 \text { days } & \
\hline \text { Oct. 7 } & 62,000 & 5 & 60 \text { days } & \
\hline \text { Jan. 6 } & 28,000 & 4 & 120 \text { days } & \
\hline \text { Nov. 12 } & 43,000 & 6 & 60 \text { days } & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following notes receivables...

Exam 9: Receivables

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

The accounts receivable turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

A company may sell its receivables, but it still assumes the risk of uncollectible accounts.

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of accounts receivable?

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

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

The following journal entries would be used in one of the two methods of accounting for uncollectible receivables. Identify each. (a)Bad Debt Expense900 Accounts Receivable-Billings900 (b)Allowance for Doubtful Accounts900 Accounts Receivable-Grover900

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

When a note is received from a customer on account, it is recorded by debiting Notes Receivable and crediting Accounts Receivable.

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Match each description to the appropriate term (a-i) . -A contra asset that represents the amount of estimated uncollectible receivables

Notes or accounts receivable that result from sales transactions are often called