Question 1

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

Question 2

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 3

The accounts receivables 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

The interest on a 6%, 60-day note for $5,000 is $300.

Accepted Answer

A) True 
 B)False

Question 5

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for Bad Debt Expense?

Accepted Answer

A)  debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000 
B)  debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 
C)  debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800 
D)  debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800

Question 6

Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include:

Accepted Answer

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

Question 8

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

Question 9

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 10

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 11

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Accepted Answer

A)  will increase net income in the period it is collected. 
B)  will decrease net income in the period it is collected. 
C)  does not affect net income in the period it is collected. 
D)  requires a correcting entry for the period in which the account was written off.

Question 12

The journal entry to record a note received from a customer to apply on account is

Accepted Answer

A)  debit Notes Receivable; credit Accounts Receivable 
B)  debit Accounts Receivable; credit Notes Receivable 
C)  debit Cash; credit Notes Receivable 
D)  debit Notes Receivable; credit Notes Payable

Question 13

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 14

When does an account become uncollectible?

Accepted Answer

A)  when the debtor fails to pay an account according to a sales contract 
B)  when the debtor fails to pay a note on the due date 
C)  there is no general rule for when an account becomes uncollectible 
D)  at the end of the fiscal year

Question 15

For a business that uses the allowance method of accounting for uncollectible receivables:

Accepted Answer

The answer of For a business that uses the allowance...

Question 16

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?

Accepted Answer

A)  Cash 200 Interest Revenue 200 
B)  Interest Receivable 800 Interest Revenue 800 
C)  Interest Receivable 200 Interest Revenue 200 
D)  Note Receivable 40,000 Cash 40,000

Question 17

A 60-day, 12% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

Accepted Answer

A)  $10,000 
B)  $10,200 
C)  $11,200 
D)  $9,800

Question 18

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 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

Journalize the following transactions for Solley Company that occurred during 2011 and 2012.
November 14, 2011 Received a $4,800.00, 90-day, 9% note from Alan Hibbetts in payment of his account.
December 31, 2011 Accrued interest on the Hibbetts note.
February 12, 2012 Received the amount due from Hibbetts on his note.

Accepted Answer

The answer of Journalize the following transactions for Solley Company...

Exam 8: Receivables

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 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

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

The interest on a 6%, 60-day note for $5,000 is $300.

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for Bad Debt Expense?

Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet.

When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include:

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

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

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.

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

The journal entry to record a note received from a customer to apply on account is

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.

When does an account become uncollectible?

For a business that uses the allowance method of accounting for uncollectible receivables:

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 60-day, 12% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

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