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Exam 8: Receivables

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Question 111

Multiple Choice

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Under the allowance method of uncollectible accounts, the entry to write off a customer's account affects the accounting equation by

A) increasing an asset and decreasing an asset
B) increasing a liability and decreasing a liability
C) decreasing an asset and decreasing stockholders' equity (expense)
D) decreasing a liability and increasing stockholders' equity (revenue)

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

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Question 112

True/False

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

A) True
B) False

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Question 113

Multiple Choice

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When a company receives an interest-bearing note receivable, it will

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.

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

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

The difference between the balance in Accounts Receivable and the balance in the Allowance for Doubtful Accounts is called the net realizable value of the receivables.

At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the year, $120 of previously written off accounts are reinstated and accounts totaling $740 are written off as uncollectible. The end-of-year balance (before adjustment) in Allowance for Doubtful Accounts should be

The amount of the promissory note plus the interest earned on the due date is called the

Match each description to the appropriate term (a-d). Each term may be used more than once. -This method records bad debts when specific accounts are deemed uncollectible. A)Direct write-off method B)Aging of receivables method C)Percent of sales method D)Allowance method