Question 1

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 amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts, respectively.

Accepted Answer

A)   $19,500 and $25,000
B)   $30,500 and $525,000
C)   $19,500 and $525,000
D)   $30,500 and $25,000E) B) and C)
F) A) and D)

Question 2

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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)   $575,000E) None of the above
F) A) and D)

Question 5

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

Accepted Answer

A) True 
 B)False

Question 6

One of the weaknesses of the direct write-off method is that it

Accepted Answer

A)   understates accounts receivable on the balance sheet
B)   violates the matching principle
C)   is too difficult to use for many companies
D)   is based on estimatesE) B) and C)
F) All of the above

Question 7

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?

Accepted Answer

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, $40,600E) None of the above
F) B) and D)

Question 8

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.E) B) and C)
F) B) and D)

Question 9

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

Accepted Answer

A)   $6,860
B)   $7,140
C)   $7,840
D)   $7,000E) A) and B)
F) B) and D)

Question 10

What is the type of account and normal balance of Allowance for Doubtful Accounts?

Accepted Answer

A)   Contra asset, credit
B)   Asset, debit
C)   Asset, credit
D)   Contra asset, debitE) None of the above
F) A) and B)

Question 11

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment) , and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Accepted Answer

A)   $29,500
B)   $34,500
C)   $32,000
D)   cannot be determinedE) B) and D)
F) A) and B)

Question 12

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.E) A) and C)
F) A) and B)

Question 13

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?

Accepted Answer

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

Question 14

Interest on a note can be calculated without knowledge of the

Accepted Answer

A)   fair value of the note
B)   rate of interest
C)   notes duration
D)   principal amountE) All of the above
F) C) and D)

Question 15

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 16

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

Accepted Answer

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.E) A) and B)
F) None of the above

Question 17

When a note is written to settle an open account, no entry is necessary.

Accepted Answer

A) True 
 B)False

Question 18

The amount of a promissory note is called the

Accepted Answer

A)   realizable value
B)   maturity value
C)   face value
D)   proceedsE) None of the above
F) A) and B)

Question 19

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 20

Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account. (Assume a 360-day year when calculating interest.)

Accepted Answer

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Exam 9: Receivables

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
verified

Correct Answer
verified

The direct write-off method of accounting for uncollectible accounts

Correct Answer
verified

Interest on a note can be calculated without knowledge of the

Correct Answer
verified

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment) , and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Correct Answer
verified

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

What is the type of account and normal balance of Allowance for Doubtful Accounts?

Correct Answer
verified

Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account. (Assume a 360-day year when calculating interest.)

Correct Answer
verified
_TB2013_00...
View Answer

One of the weaknesses of the direct write-off method is that it

Correct Answer
verified

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

Correct Answer
verified

When a note is written to settle an open account, no entry is necessary.

Correct Answer
verified

The amount of a promissory note is called the

Correct Answer
verified

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Exam 9: Receivables

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

Correct AnswerverifiedShow Answer

The direct write-off method of accounting for uncollectible accounts

Correct AnswerverifiedShow Answer

Interest on a note can be calculated without knowledge of the

Correct AnswerverifiedShow Answer

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment) , and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Correct AnswerverifiedShow Answer

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is the type of account and normal balance of Allowance for Doubtful Accounts?

Correct AnswerverifiedShow Answer

Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account. (Assume a 360-day year when calculating interest.)

Correct Answerverified_TB2013_00...View AnswerShow Answer

One of the weaknesses of the direct write-off method is that it

Correct AnswerverifiedShow Answer

If the maker of a note fails to pay the debt on the due date, the note is said to be dishonored.

Correct AnswerverifiedShow Answer

When a note is written to settle an open account, no entry is necessary.

Correct AnswerverifiedShow Answer

The amount of a promissory note is called the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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_TB2013_00...
View Answer

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