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Exam 8: Receivables

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Question 31

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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 uncollecttible. 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

E) All of the above
F) B) and D)

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Question 32

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When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

A) True
B) False

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Question 33

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Journalize the following transactions using the allowance method of accounting for uncollectible receivables. June 10 Received $1,100 from Jim Dobbs and wrote off the remainder owed of $4,000. Oct. 11 Reinstated the account of Jim Dobbs and received $4,000 cash in full payment.

Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables. June 10 Received $1,200 from Jim Dobbs and wrote off the remainder owed of $4,200. Oct. 11 Reinstated the account of Jim Dobbs and received $4,200 cash in full payment.

In computing the maturity date of a note, the date the note is issued is included but the due date is omitted.

When companies sell their receivables to other companies, the transaction is called factoring.

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?

The following are the current assets from Hanes Co. as of December 31, 2011: $\begin{array}{|l|l|}\hline 42,000 & \text { Accounts Receivable } \\\hline 3,000 & \text { Allowance for Doubtful Accounts } \\\hline 79,000 & \text { Cash } \\\hline 3,500 & \text { Interest Receivable } \\\hline 104,000 & \text { Merchandise Inventory } \\\hline 100,000 & \text { Notes Receivable } \\\hline\end{array}$ Prepare the current asset section of the balance sheet.

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts

When an account receivable that has been written off is subsequently collected, the account receivable is said to be reinstated.

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

At the end of the current year, Accounts Receivable has a balance of $900,000; Allowance for Doubtful Accounts has a debit balance of $3,500; and net sales for the year total $4,000,000. 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.

Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account.

When using the direct write-off method off accounting for uncollectible receivables, the account Allowance for Doubtful Accounts is debited when a specific account is determined to be uncollectible.

The term "receivables" includes all

Receivables are usually listed in order

An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $5,000. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record the bad debt expense for the period will require a

When using the allowance method to estimate uncollectible accounts receivable based on an analysis of receivables shows that $790 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $120. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

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

At the end of the current year, Accounts Receivable has a balance of $850,000; Allowance for Doubtful Accounts has a debit balance of $3,500; and net sales for the year total $3,000,000. An analysis of receivables indicates the uncollectible receivables are estimated to be $35,000. 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.