Question 1

The receivable that is usually evidenced by a formal instrument of credit is a(n)

Accepted Answer

A)  trade receivable. 
B)  note receivable. 
C)  accounts receivable. 
D)  income tax receivable.

Question 2

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

Question 3

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

Question 4

On June 30th (the end of the period) Brown Company has a credit balance of $2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $30,025. Journalize the appropriate adjusting entry.

Accepted Answer

The answer of On June 30th (the end of the...

Question 5

The balance in the Allowance for Doubtful Accounts account at the end of the year includes the total of all accounts written-off since the beginning year.

Accepted Answer

A) True 
 B)False

Question 6

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on the estimate above, which of the following adjusting entries should be made?

Accepted Answer

A)  debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800 
B)  debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200 
C)  debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800 
D)  debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800

Question 7

When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?

Accepted Answer

A)  Bad Debt Expense 500 Allowance for Doubtful Accounts 500 
B)  Bad Debt Expense 500 Accounts Receivable - Bob Smith 500 
C)  Cash 300 Allowance for Doubtful Accounts 200
Accounts Receivable - Bob Smith 500 
D)  Cash 500 Accounts Receivable - Bob Smith 500

Question 8

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

Question 9

At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a debit balance of $6,200; and net 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 of 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,...

Question 10

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Accepted Answer

A)  $8,500 
B)  -$8,500 
C)  $9,000 
D)  Cannot be determined

Question 11

Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12th the company receives a $550 check from Chad Thomas in settlement of Thomas' $1,100 outstanding accounts receivable. Due to Thomas' failing health he is closing his company and is expecting to make no further payments to Discount Mart. Journalize this declaration.

Accepted Answer

The answer of Discount Mart utilizes the allowance method of...

Question 12

Journalize the following transactions (Assume a 360-day year when calculating interest.):

Accepted Answer

The answer of Journalize the following transactions (Assume a 360-day...

Question 13

When companies sell their receivables to other companies, the transaction is called factoring.

Accepted Answer

A) True 
 B)False

Question 14

The direct write-off method of accounting for uncollectible accounts

Accepted Answer

A)  emphasizes balance sheet relationships. 
B)  is often used by small companies and companies with few receivables. 
C)  emphasizes cash realizable value. 
D)  emphasizes the matching of expenses with revenues.

Question 15

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 net 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 Allowance of Doubtful Accounts.)

Accepted Answer

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

Question 16

When the allowance method is used to account for uncollectible accounts, Bad Debts 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 17

Match between columns
                        Premises: Direct Write-off Method
Allowance for Doubtful Accounts
Net Realizable Value
Bad Debt Expense
Aging Report
Accounts Receivable
Accounts Receivable Turnover
Factoring
Receivables

Accepted Answer

The Answer of Measures how frequently during the year accounts is...

Question 18

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

Accepted Answer

A) True 
 B)False

Question 19

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 20

Two methods of accounting for uncollectible accounts are the

Accepted Answer

A)  direct write-off method and the allowance method. 
B)  allowance method and the accrual method. 
C)  allowance method and the net realizable method. 
D)  direct write-off method and the accrual method.

Exam 9: Receivables

The receivable that is usually evidenced by a formal instrument of credit is a(n)

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?:

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

On June 30th (the end of the period) Brown Company has a credit balance of $2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $30,025. Journalize the appropriate adjusting entry.

The balance in the Allowance for Doubtful Accounts account at the end of the year includes the total of all accounts written-off since the beginning year.

When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?

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

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment) , and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Journalize the following transactions (Assume a 360-day year when calculating interest.):

When companies sell their receivables to other companies, the transaction is called factoring.

The direct write-off method of accounting for uncollectible accounts

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

Match each of the following terms associated with the best description of that term.

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales.

Two methods of accounting for uncollectible accounts are the