Question 1

The maturity value of a 12%, 60-day note for $5,000 is $5,600.

Accepted Answer

A) True 
 B)False

Question 2

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 3

An alternative name for bad debt Expense is an)

Accepted Answer

A)   collection expense
B)   credit loss expense
C)   uncollectible accounts expense
D)   deadbeat expense

Question 4

The term "receivables" includes all

Accepted Answer

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

Question 5

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 6

When referring to a note receivable or promissory note

Accepted Answer

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

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 a

Accepted Answer

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

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 expense for the period will require a

Accepted Answer

A)   debit to Bad Debt Expense for $8,600
B)   debit to Bad Debt Expense for $7,900
C)   debit to Bad Debt Expense for $7,200
D)   credit to Allowance for Doubtful Accounts for $700

Question 10

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 Simmon's 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 net credit sales of $900,000 at year-end, and has 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 3/4 of 1% of net 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, the Allowance for Doubtful Accounts has a debit balance of $750.

Accepted Answer

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

Question 11

Match each description to the appropriate term a-d) . Each term may be used more than once.
-This method focuses on the income statement.

Accepted Answer

A)  Direct write-off method
B)  Aging of receivables method
C)  Percent of sales method
D)  Allowance method

Question 12

Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
Required:  1) Journalize the write-offs for the current year under the direct write-off method.
2) Journalize the write-offs for the current year under the allowance method. Also, journalize the adjusting entry for uncollectible receivables assuming the company made $2,400,000 of credit sales during the year and the industry average for uncollectible receivables is 1.50% of credit sales.
3) How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> 3) Net income would have been $5,000 hi...

Question 13

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?

Accepted Answer

A)   Bad Debt Expense Allowance for Doubtful Accounts17,00017,000
B)   Bad Debt Expense Allowance for Doubtful Accounts19,50019,500
C)   Bad Debt Expense Allowance for Doubtful Accounts22,00022,000
D)   Bad Debt Expense Allowance for Doubtful Accounts65,00065,000

Question 14

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

Question 15

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?

Accepted Answer

A)   Uncollectible Accounts Expense
B)   Allowance for Doubtful Accounts
C)   Accounts Receivable
D)   Interest Expense

Question 16

Interest on a note can be calculated without knowledge of the

Accepted Answer

A)   fair value of the note
B)   rate of interest
C)   note duration
D)   principal amount

Question 17

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

Accepted Answer

A)   debit to Bad Debts 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

Question 18

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

Accepted Answer

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

Question 19

Which of the following receivables would not be classified as an "other receivable"?

Accepted Answer

A)   advance to an employee
B)   interest receivable
C)   refundable income tax
D)   notes receivable

Question 20

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 sales for the year total $3,500,000. Bad debt expense is estimated at 1/2 of 1% of sales.
Determine a) the amount of the adjusting entry for bad debt expense; b) the adjusted balances of Accounts Receivable, Allowance for 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,...

Exam 8: Receivables

Correct Answer
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Correct Answer
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Match each description to the appropriate term a-d) . Each term may be used more than once. -This method focuses on the income statement.

Correct Answer
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Interest on a note can be calculated without knowledge of the

Correct Answer
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An alternative name for bad debt Expense is an)

Correct Answer
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Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

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

Correct Answer
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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 expense for the period will require a

Correct Answer
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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?

Correct Answer
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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

Correct Answer
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The term "receivables" includes all

Correct Answer
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When referring to a note receivable or promissory note

Correct Answer
verified

Two methods of accounting for uncollectible accounts are the

Correct Answer
verified

The maturity value of a 12%, 60-day note for $5,000 is $5,600.

Correct Answer
verified

The direct write-off method of accounting for uncollectible accounts

Correct Answer
verified

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

Correct Answer
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Which of the following receivables would not be classified as an "other receivable"?

Correct Answer
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Correct Answer
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3) Net income would have been $5,000 hi...
View Answer

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

Correct Answer
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Exam 8: Receivables

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match each description to the appropriate term a-d) . Each term may be used more than once. -This method focuses on the income statement.

Correct AnswerverifiedShow Answer

Interest on a note can be calculated without knowledge of the

Correct AnswerverifiedShow Answer

An alternative name for bad debt Expense is an)

Correct AnswerverifiedShow Answer

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 expense for the period will require a

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The term "receivables" includes all

Correct AnswerverifiedShow Answer

When referring to a note receivable or promissory note

Correct AnswerverifiedShow Answer

Two methods of accounting for uncollectible accounts are the

Correct AnswerverifiedShow Answer

The maturity value of a 12%, 60-day note for $5,000 is $5,600.

Correct AnswerverifiedShow Answer

The direct write-off method of accounting for uncollectible accounts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following receivables would not be classified as an "other receivable"?

Correct AnswerverifiedShow Answer

Correct Answerverified 3) Net income would have been $5,000 hi...View AnswerShow Answer

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

Correct AnswerverifiedShow Answer

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3) Net income would have been $5,000 hi...
View Answer

Correct Answer
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