Question 1

The allowance method may be used to record bad debt losses for income tax purposes.

Accepted Answer

A) True 
 B)False  False

Question 2

On December 31, 2013, prior to adjustments, Accounts Receivable has a debit balance of $370,000 and the Allowance for Doubtful Accounts has a credit balance of $400. The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year. The amount of the adjusting entry needed to record the estimated losses from uncollectible accounts is

Accepted Answer

A)   $18,100
B)   $18,500
C)   $18,900
D)   $17,800 A

Question 3

Which of the following statements is not correct?

Accepted Answer

A)   The allowance method involves anticipating losses from uncollectible accounts by recognizing an expense for these losses before the actual accounts are written off.
B)   The adjusting entry to record the estimated loss from uncollectible accounts includes a credit to Accounts Receivable.
C)   Losses from uncollectible accounts can be estimated by analyzing sales or accounts receivable.
D)   The balance of Uncollectible Accounts Expense appears among the operating expenses on the income statement. B

Question 4

On December 31, 2014, prior to adjustments, Accounts Receivable has a debit balance of $356,000 and the Allowance for Doubtful Accounts has a credit balance of $1,200. The firm estimates its losses from uncollectible accounts to be 4% of accounts receivable at the end of the year. The balance in the Allowance for Doubtful Accounts after the adjusting entry for the estimated losses from uncollectible accounts is

Accepted Answer

A)   $13,040
B)   $14,240
C)   $15,440
D)   $17,800

Question 5

A procedure that groups accounts receivable according to the length of time they have been outstanding is called ____________________ the accounts receivable.

Accepted Answer

The answer of A procedure that groups accounts receivable according...

Question 6

Uncollectible Accounts Expense can be called Loss from Uncollectible Accounts.

Accepted Answer

A) True 
 B)False

Question 7

When an account that was written off is later collected, the entry to reverse the write-off is recorded as a ____________________ to Accounts Receivable and the customer's account.

Accepted Answer

The answer of When an account that was written off...

Question 8

Allowance for Doubtful Accounts has a credit balance of $1,000 immediately before the write-off of a $300 account receivable. The credit balance of Allowance for Doubtful Accounts immediately after the write-off is

Accepted Answer

A)   $700.
B)   $1,000.
C)   $1,300.
D)   $300.

Question 9

Allowance for Doubtful Accounts has a credit balance of $2,000 immediately before the write-off of a $600 account receivable. The balance of Allowance for Doubtful Accounts immediately after the write-off is

Accepted Answer

A)   $600 debit.
B)   $1,400 credit.
C)   $1,400 debit.
D)   $2,600 credit.

Question 10

Raymond Repair Services Company uses the direct charge-off method to record uncollectible accounts. On January 15, 2014, the company learned that Caroline Smith, a customer who owed $380, had moved and left no forwarding address. Raymond concluded that no part of the debt was collectible. Prepare the general journal entry to write off the account.

Accepted Answer

The answer of Raymond Repair Services Company uses the direct...

Question 11

After the adjusting entry is made to record the estimate of losses from uncollectible accounts, Allowance for Doubtful Accounts should have a(n) ____________________ balance.

Accepted Answer

The answer of After the adjusting entry is made to...

Question 12

The experience of other firms in the same line of business may be used in estimating losses from uncollectible accounts for a new firm.

Accepted Answer

A) True 
 B)False

Question 13

On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $400. An aging analysis of the accounts receivable produces an estimate of $2,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

Accepted Answer

A)   $400.
B)   $1,600.
C)   $2,000.
D)   $2,400.

Question 14

At the end of the current year, the trial balance of Daniels' Furniture Store included the accounts and balances shown below. Credit sales were $180,000. Returns and allowances on these sales were $2,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.4 percent of net credit sales. $$\begin{array} { l r } 
\text { Accounts Receivable } & \$ 36,000 \mathrm { Dr } . \
\text { Allowance for Doubtful Accounts } & 1,000 \mathrm { Dr } . \
\text { Sales } & 290,000 \mathrm { Cr } . \
\text { Sales Returns and Allowances } & 4,000 \mathrm { Dr } .
\end{array}$$ 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Accepted Answer

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

Question 15

The Salinas Company uses the direct charge-off method to record uncollectible accounts. The following transactions occurred during 2013. Record the transactions on page 6 of a general journal, assuming the company also uses a Cash Receipts journal. Omit descriptions.

Accepted Answer

The answer of The Salinas Company uses the direct charge-off...

Question 16

The balance of the Allowance for Doubtful Accounts account is reported as

Accepted Answer

A)   a liability on the balance sheet.
B)   a deduction from Sales on the income statement.
C)   a deduction from Accounts Receivable on the balance sheet.
D)   an expense on the income statement.

Question 17

The adjusting entry to record estimated losses from uncollectible accounts includes a(n) ____________________ to the Allowance for Doubtful Accounts account.

Accepted Answer

The answer of The adjusting entry to record estimated losses...

Question 18

The totals from the Kalvin Company's Schedule of Accounts Receivable by Age as of the end of the current year are shown below. $\begin{array} { l  }
 \text { Account }&\text { Balance }&\text { Current }&{1-30}&{31-60}&\text { Over } 60 \
\hline\text { Totals } & \$ 11,800 & \$ 8,800 & \$ 1,500 & \$ 600&\$ 900\
\hline
\end{array}$
 As of the end of the current year, there is a debit balance of $75 in the Allowance for Doubtful Accounts.
1. Compute the estimated uncollectible accounts using the following rates. $\begin{array}{lr}
\text { Current } & 1 \% \
1-30 \text { days past due } & 10 \% \
31-60 \text { days past due } & 25 \% \
\text { Over } 60 \text { days past due } & 50 \%
\end{array}$ 2. Compute the amount of the adjustment for uncollectible accounts expense.

Accepted Answer

The answer of The totals from the Kalvin Company's Schedule...

Question 19

Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year, before adjustments. Sales for the year amounted to $870,000, sales discounts amounted to $30,000 and sales returns and allowances amounted to $40,000. If the uncollectible accounts expense is estimated at 2% of net sales, the balance in the Allowance for Doubtful Accounts after the entry to record estimated losses from uncollectible accounts will be

Accepted Answer

A)   $17,400
B)   $16,500
C)   $16,000
D)   $15,500

Question 20

At the end of the current year, the trial balance of Johannes' Sporting Goods Shop included the accounts and balances shown below. Credit sales were $180,000. Returns and allowances on these sales were $2,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 3 percent of accounts receivable. $$\begin{array} { l r } 
\text { Accounts Receivable } & \$ 36,000 \mathrm { Dr } . \
\text { Allowance for Doubtful Accounts } & 1,000 \mathrm { Dr } . \
\text { Sales } & 290,000 \mathrm { Cr } . \
\text { Sales Returns and Allowances } & 4,000 \mathrm { Dr } .
\end{array}$$ 1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Accepted Answer