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Exam 13: Accounting for Bad Debts

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Question 41

True/False

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The Allowance account is a contra-liability account.

A) True
B) False

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Question 42

Multiple Choice

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Using the aging method, estimated uncollectible accounts are $5,000. If the balance of Allowance for Doubtful Accounts is $1,500 credit before adjustment, what is a Bad Debt Expense for the period?

A) $3,500
B) $6,500
C) $5,000
D) $1,500

E) B) and C)
F) A) and D)

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Question 43

Multiple Choice

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Bad Debts Expense is:

Bad Debts Expense is recorded in the year the sale was earned when using the income statement allowance approach.

Determine the amount of the adjustment for bad debts given: Bad debts are estimated to be 6% of receivables $ ________

Describe and contrast the procedures for estimating uncollectible accounts under the (a)income statement approach, (b)the balance sheet approach, and (c)the direct write-off approach.

Use the account code numbers to identify how the following transactions would be journalized. -Increase the allowance for the estimated bad debts using the percentage of receivables. Debit account ________ Credit account ________

Which method uses an aging of Accounts Receivable to calculate the Bad Debts Expense?

Carolina Sports uses the allowance method of accounting for uncollectible accounts. Record journal entries for the transactions listed below: March 1 Received $800 from Joe in payment of his $1,500 account. March 8 Wrote off the balance of Joe's account. March 9 Received $600 from Tayler to pay off his account in full.

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature. -

A notice was received from Mary, who is a customer, that she was bankrupt. The entry to write-off her balance of $1,250 would be:

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

Gross Accounts Receivable is $10,000. Allowance for Doubtful Accounts has a credit balance of $200. Net sales for the year are $150,000. In the past, 2% of sales had proved uncollectible, and an aging of the receivables indicates $1,200 is doubtful. Under the income statement approach, Bad Debts Expense for the year is:

To directly write off an account would require a debit to:

After aging the Accounts Receivable, it is estimated that $2,450 will not be collected and the allowance account has an existing debit balance of $300. If Accounts Receivable is $107,000, the net receivables would be:

A company uses the allowance method and has determined a customer's bill for $2,000 must be written off. The journal entry to record the write off is:

Miami Company uses Allowance for Doubtful Accounts. When Miami writes off an uncollectible account, there is:

A company writes off a specific account as uncollectible, but later the customer pays. The journal entry to record the reinstatement under the allowance method includes a(n) :

The current balance of Allowance for Doubtful Accounts is considered when calculating the current period's Bad Debts Expense under the following approach:

The adjusting entry for uncollectibles is based on an estimate.