When using the estimate based on sales method, the entry to record uncollectible accounts expense includes a credit to the Accounts Receivable account.. If Allowance for Doubtful Account
Trang 29 The direct write-off method records Bad Debt Expense in the year the specific account receivable is
14 When using the estimate based on sales method, the entry to record uncollectible accounts expense includes
a credit to the Accounts Receivable account
True False
15 The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value
Trang 317 At the end of a period, (before adjustment), Allowance for Doubtful Accounts has a credit balance of
$250 The net credit sales for the period total $500,000 If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is
$4,750
True False
18 At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of
$500 Net credit sales for the period totaled $800,000 If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500
20 At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of
$5,000 The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000 The amount to be recorded in the adjusting entry for the Bad Debt Expense is
$45,000
True False
21 When using the analysis of receivables method for estimating uncollectible receivables, the amount
computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry True False
22 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
True False
Trang 424 A primary difference between the direct write-off and allowance method is whether or not bad debts is based on a percentage of sales
Trang 534 When a note is received from a customer on account, it is recorded by debiting Notes Receivable and
crediting Accounts Receivable
38 The accounts receivables turnover ratio is computed by dividing total gross sales by the average net
receivables during the year
Trang 642 The receivable that is usually evidenced by a formal instrument of credit is a(n)
45 The term "receivables" includes all
A money claims against other entities
B merchandise to be collected from individuals or companies
C cash to be paid to creditors
D cash to be paid to debtors
46 When does an account become uncollectible?
A when accounts receivable is converted into notes receivable
B when discount is availed on notes receivable
C there is no general rule for when an account becomes uncollectible
D at the end of the fiscal year
Trang 748 The direct write-off method of accounting for uncollectible accounts
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
49 Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
A at the end of each accounting period
B when a credit sale is past due
C whenever a pre-determined amount of credit sales have been made
D when an account is determined to be worthless
50 An alternative name for Bad Debt Expense is
A Collection Expense
B Credit Loss Expense
C Uncollectible Accounts Expense
D Deadbeat Expense
51 Two methods of accounting for uncollectible accounts are the
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
Trang 854 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?:
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
C Allowance for Doubtful Accounts
D Bad Debts Expense
56 If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
A Uncollectible Accounts Expense
B Allowance for Doubtful Accounts
C Accounts Receivable
D Interest Expense
57 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 the accounts receivable?
Trang 959 On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the
A Uncollectible accounts expense for the year
B total of the accounts receivables written-off during the year
C total estimated uncollectible accounts as of the end of the year
D sum of all accounts that are past due
60 What is the type of account and normal balance of Allowance for Doubtful Accounts?
A Contra asset, credit
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
62 A debit balance in the Allowance for Doubtful Accounts
A is the normal balance for that account
B indicates that actual bad debt write-offs have been less than what was estimated
C cannot occur if the percentage of receivables method of estimating bad debts is used
D indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
63 To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a
A debit to Bad Debs Expense and a credit to Allowance for Doubtful Accounts
B debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts
C debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable
D debit to Loss on Credit Sales and a credit to Accounts Receivable
Trang 10
65 Tanning Company analyzes its receivables to estimate bad debt expense The accounts receivable balance is
$390,000 and credit sales are $1,300,000 An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible What adjusting entry will Tanning Company make if the
Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?
A Bad Debt Expense 17,000
Allowance for Doubtful Accounts 17,000
B Bad Debt Expense 19,500
Allowance for Doubtful Accounts 19,500
C Bad Debt Expense 22,000
Allowance for Doubtful Accounts 22,000
D Bad Debt Expense 65,000
Allowance for Doubtful Accounts 65,000
66 You have just received notice that a customer of yours with an Account Receivable balance of $100 has
gone bankrupt and will not make any future payments Assuming you use the allowance method, the entry you
make is to
A debit Bad Debt Expense and credit Allowance for Doubtful Accounts
B debit Bad Debt Expense and credit Accounts Receivable
C debit Allowance for Doubtful Accounts and credit Accounts Receivable
D debit Allowance for Doubtful Accounts and credit Bad Debt Expense
68 An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals
$7,900 If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt
Trang 1169 An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals
$6,400 If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a
A debit to Bad Debt Expense for $7,700
B debit to Bad Debt Expense for $6,400
C debit to Bad Debt expense for $5,100
D credit to Allowance for Doubtful Accounts for $1,300
70 An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals
$4,000 If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a
A debit to Allowance for Doubtful Accounts for $3,200
B debit to Bad Debt Expense for $3,200
C debit to Allowance for Doubtful Accounts for $4,000
D credit to Allowance for Doubtful Accounts for $4,000
71 The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles
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
72 Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700 Which of the following entries records the proper adjustment for Bad Debt Expense?
A debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
B debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800
C debit Bad Debt Expense $21,800; credit Allowance for Doubtful Accounts, $21,800
D debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600
73 Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment),
Trang 1274 Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000 Which of the following entries records the proper adjusting entry for bad debt expense?
A debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600
B debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400
C debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600
D debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600
75 At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of
$760 During the year, $120 of previously written-off accounts were reinstated and accounts totaling $740 are written-off as uncollectible The end of the year balance (before adjustment) in the Allowance for Doubtful Accounts should be
A credit to Bad Debt Expense
B credit to Accounts Receivable
C debit to Allowance for Doubtful Accounts
D debit to Accounts Receivable
77 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
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
Trang 13
79 Abbott Company uses the allowance method of accounting for uncollectible accounts Abbott estimates that 3% of net credit sales will be uncollectible On January 1, 2010, the Allowance for Doubtful Accounts had
a credit balance of $2,400 During 2010, Abbott wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000 There were no Sales Returns or Sales Discounts during the year After the adjusting entry, the December 31, 2010, balance in the Bad Debt Expense would be
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
81 Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year (before
adjustment) The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900 Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?
A debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600
B debit Allowance for Doubtful Accounts $43,200; credit Bad Debt Expense, $43,200
C debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200
D debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600
82 Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment) The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to
be $31,900 Which of the following adjusting entries is needed to record the Bad Debt Expense for the year?
A debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200
B debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200
C debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600
D debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600
83 Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment),
Trang 1484 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?
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
85 When using the allowance method to estimate uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible The Allowance for Doubtful Accounts has a debit balance of $110 The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:
87 Allowance for Doubtful Accounts is classified as a(n) and has a normal balance
A owners’ equity, credit
B contra-asset, debit
C owners’ equity, debit
D contra-asset, credit
Trang 15
89 When comparing the direct write-off method and the allowance method of accounting for uncollectible
receivables, a major difference is that the direct write-off method
A uses a percentage of sales method to estimate uncollectible accounts B is used primarily by large companies with many receivables C is used primarily by small companies with few receivables D uses an allowance account 90 When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal? 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
91 When a company uses the allowance method of accounting for uncollectible receivables, the entry to reinstate a previously written off account would include: 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 92 The amount of a promissory note is called the
A realizable value
B maturity value
C face value
D proceeds
Trang 16
94 A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account The face value of the note is
96 Interest on a note can be calculated without knowledge of the
A fair value of the note
Trang 17100 A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity The journal entry to recognize this event is
A debit Cash, $6,120; credit Notes Receivable, $6,120
B debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Receivable, $120
C debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
D debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Revenue, $120
101 When referring to a note receivable or promissory note
A the maker is the party to whom the money is due
B the note is not considered a formal credit instrument
C the note cannot be factored to another party
D the note may be used to settle an accounts receivable
102 When a company receives an interest-bearing note receivable, it will
A debit Notes Receivable for the maturity value of the note
B debit Notes Receivable for the face value of the note
C credit Notes Receivable for the maturity value of the note
D credit Notes Receivable for the face value of the note
Trang 18105 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
Interest Revenue 200
B Interest Receivable 800
Interest Revenue 800
C Interest Receivable 200
Interest Revenue 200
D Note Receivable 40,000 Cash 40,000 106 On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company The terms of the note were $20,000 face value and 6% interest On October 30, the journal entry to record the collection of the note should include a A credit to Notes Receivable for $20,300 B debit to Interest Receivable for $300 C credit to Interest Revenue for $300 D debit to Notes Receivable for $20,000 107 Current assets are usually listed in order
A of the due date B of the size C alphabetically D of liquidity 108 Accounts Receivable Turnover measures
A how frequently during the year the accounts receivable are converted to cash
B the number of days of accounts receivable outstanding
C the fair market value of accounts receivable
D the efficiency of the accounts payable function
Trang 19110 Given the following information, compute Accounts Receivable Turnover:
Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts, respectively
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.)
Trang 20113 Match each of the following terms associated with the best description of that term
1 The difference between Accounts Receivable
and Allowance for Doubtful Accounts Accounts Receivable
2 A list of customer accounts sorted by age
3 Operating expense recorded as a result of
receivables becoming uncollectible
Allowance for Doubtful Accounts
4 A contra asset that represents the amount of
estimated uncollectible receivables at a specific
date
Direct Write-off
Method
5 A receivable created from selling merchandise
or services on account Bad Debt Expense
6 All money claims against other entities Net Realizable Value
7 Another term for selling receivables Factoring
8 Records bad debt expense only when a specific
customer’s account is deemed worthless Receivables
9 Measures how frequently during the year
accounts receivables are being turned into cash
Accounts Receivable
Turnover
114 Match each of the following terms associated with notes receivable with the best description of that term
1 The amount due when the note is paid off
Notes Receivable
2 The amount charged for using the money of another
3 The time between the date a note is issued and the
4 The stated rate charged for using the money of
5 A formal written instrument that represents amounts
due from customers
Dishonored
Note
6 The party promising to pay a note Face Amount
7 The dollar amount listed on the promissory note Maker
8 A note that is not paid when it is due Term
115 Other than accounts receivable and notes receivable, name other receivables that might be included in the general ledger
Trang 21116 Discuss the similarities and differences between accounts receivables, notes receivables and other receivables
Trang 22119 Journalize the following transactions using the direct write-off 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 for and received cash in full payment
120 Stephanie Roe utilizes the direct write-off method of accounting for uncollectible receivables On
September 15th she is notified by the attorneys for Jacob Marley that Jacob Marley is bankrupt and no cash is expected in the liquidation of Jacob Marley Write off the $675 of accounts receivable due Jacob Marley
Trang 23122 The following journal entries would be used in one of the two methods of accounting for uncollectible receivables Identify each
(b) Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment Uncollectible receivables are estimated at 2% of
credit sales, which totaled $1,000,000 for the year
Trang 24
124 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
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
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
Trang 25127 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 net sales for the year total $300,000 Bad debt expense is estimated
at 2.5% of net sales
Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of
Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value
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
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
Trang 26130 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
Trang 27133 Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method
a Determine the due date of the note
b Determine the maturity value of the note
c Journalize the entry to record the receipt of the payment of the note at maturity
Fill in the blanks related to the characteristics of a promissory note:
1 The party promising to pay the note is called the
2 The amount for which the note is written is called the _ amount
3 The date the note is to be paid is the _ date
4 The time between the date when a note is written and the time it must be paid is called the _ of the note
Trang 28
136 Determine the due date and amount of interest due at maturity on the following notes:
Trang 29(2) Journalize the write-offs for 2011 under the allowance method Also, journalize the adjusting entry for uncollectible receivables
assuming the company made $2,400,000 of credit sales during 2011 and the industry average for uncollectible receivables is 1.50% of credit sales
Trang 30141 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
Trang 31142 Financial Statement data for the years ended December 31 for Parker Corporation is as follows:
2012 2011
Net Sales $2,595,600 $2,409,500
Accounts Receivable
Beginning of the year $ 390,000 $400,000
End of the year 434,000 390,000
a) Determine the accounts receivable turnover for 2012 and 2011
b) Determine the number of days’ sales in receivables for 2012 and 2011
c) Does the change in accounts receivable turnover and number of days’ sales in receivables from 2011 to 2012 indicate a favorable or unfavorable trend.?
143 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
Trang 32144 For each of the following notes receivables held by Rogers Company determine the interest revenue to be reported on the income statements for 2011 and 2012 Round answers to nearest whole dollar
b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year
Trang 33146 For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt
Expense to be recorded in 2014, the balance in Allowance for Doubtful Accounts after adjustment at December
31, 2014, and the net realizable value of Accounts Receivable at December 31, 2014:
a) Based on an analysis of Simmon’s Company’s $380,000 balance in Accounts Receivable at December 31,
2014, is 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 net credit sales of $900,000 during 2014, and has an Accounts Receivable balance of
$425,000 at December 31, 2014, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment Blake estimates Bad Debt Expense as 3/4 of 1% of net credit sales
c) Hidgon Inc has a balance of $812,000 in Accounts Receivable at December 31, 2014 An analysis of those receivables shows $24,000 will probably not be collected Before adjusting entries are prepared, the Allowance for Doubtful Accounts has a debit balance of $750
a Determine the due date of the note
b Determine the interest
c Determine the maturity value of the note
d Journalize the entry to record the issuance of the note by Potts on Feb 3
e Journalize the entry to record the receipt of payment of the note at maturity by Valley Co
Trang 34(2) receipt by the payee of the amount due on the note at maturity Round answers to the nearest $1
Trang 35151 Journalize the following transactions (Assume a 360-day year when calculating interest.):
Trang 36153 For a business that uses the allowance method of accounting for uncollectible receivables:
(1) Record the adjusting entry at December 31, 2010, the end of the fiscal year, to record the bad debt expense The accounts
receivable account has a balance of $800,000, and the contra asset account before adjustment has a debit balance of
$600 Analysis of the receivables indicates uncollectible receivables of $18,000
(2) In March, 2011, the $350 owed by Fronk Co on account is written off as uncollectible
(3) In November, 2011, $200 of the Fronk Co account is reinstated and payment of that amount is received
(4) In December, 2011, $400 is received on the $600 owed by Dodger Co and the remainder is written off as uncollectible
Trang 37a Compute the accounts receivable turnover for 2010
b Compute the number of days’ sales in receivable at the end of 2010.
155 Journalize the following transactions of Upton Drugs:
Trang 38Chapter 9 Receivables Key
Trang 399 The direct write-off method records Bad Debt Expense in the year the specific account receivable is
14 When using the estimate based on sales method, the entry to record uncollectible accounts expense includes
a credit to the Accounts Receivable account
Trang 4017 At the end of a period, (before adjustment), Allowance for Doubtful Accounts has a credit balance of
$250 The net credit sales for the period total $500,000 If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is
$4,750
FALSE
18 At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of
$500 Net credit sales for the period totaled $800,000 If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500
20 At the end of a period (before adjustment), Allowance for Doubtful Accounts has a credit balance of
$5,000 The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $50,000 The amount to be recorded in the adjusting entry for the Bad Debt Expense is
$45,000
TRUE
21 When using the analysis of receivables method for estimating uncollectible receivables, the amount
computed in the analysis is usually the amount that would be recorded in the end-of-period adjusting entry
FALSE
22 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