Chapter 9: Acct Multiple Choice: Notes or Accounts Receivables, the Allowance Method

A note receivable due in 18 months is listed on the balance sheet under the captioninvestments
The receivable that is usually evidenced by a formal instrument of credit is anote receivable
Which of the following receivables would not be classified as an “other receivable”? Advance to an employee, Interest receivable, Refundable income tax, Notes receivablenotes receivable
Notes or accounts receivables that result from sales transactions are often calledtrade receivables
The term “receivables” includes allmoney claims against other entities
When does an account become uncollectible?there is no general rule for when an account becomes uncollectible
The type of account and normal balance of Allowance for Doubtful Accounts iscontra asset, credit
The two methods of accounting for uncollectible receivables are the allowance method and thedirect write-off method
The direct write-off method of accounting for uncollectible accountsis not generally accepted as a basis for estimating bad debts.
Under the direct write-off method of accounting for uncollectible accounts, Bad Debts expense is debitedwhen an account is determined to be worthless
An alternative name for Bad Debts Expense isuncollectible accounts expense
Two methods of accounting for uncollectible accounts are thedirect write-off method and the allowance method
If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write-off a customer’s account as uncollectible?bad debt expense
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?accounts receivable
One of the weaknesses of the direct write-off method is that itviolates the matching principle
The LMN Co. uses the direct write-off method of accounting for uncollectible accounts receivable. The entry to write off an account that has been determined to be uncollectible would be as follows:debit uncollectible accounts expense; credit accounts receivable
Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment) and uncollectible accounts expense is estimated at 3% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is$18,000
Under the allowance method, writing off an uncollectible accountaffects only balance sheet accounts
An estimate based on an analysis of receivabels shows that $780 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. After preparing the adjusting entry at the end of the year, the balance in the Allowance for Doubtful Accounts is$780
If the allowance method of accounting for uncollectible receivabels is used, what general ledger account is debited to write off a customer’s account as uncollectible?Allowance for Doubtful Accounts
Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates doubtful accounts of $15,000. Which of the following entries records the proper provision for doubtful accounts?debit uncollectible accounts expense, $14,200; credit allowance for doubtful accounts, $14,200.
Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustments), and the uncollectible accounts expense is estimated at 3% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is$18,000
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $450,000 and Allowance for Doubtful Accounts has a balance of $25,000. What is the net realizable value of the accounts receivable?$425,000
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?Accounts receivable
Allowance for Doubtful Accounts is listed on the balance sheet under the captioncurrent assets
On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to thetotal estimated uncollectible accounts as of the end of the year.
Allowance for Doubtful Accounts has a credit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers’ accounts indicates doubtful accounts of $12,900. Which of the following entries records the proper provision for doubtful accounts?debit uncollectible accounts expense $11,800; credit allowance for doubtful accounts $11,800
Allowance for Doubtful Accounts has a credit balance of $1,500 at the end of the year (before adjustment), and an analysis of customers’ accounts indicates doubtful accounts of $17,900. Which f the following entries records the proper provision for doubtful accounts?debit uncollectible accounts expense, $16,400; credit allowance for doubtful accounts $16,400
What is the type of account and normal balance of Allowance for Doubtful Accountscontra asset, credit
A company uses the estimate of sales method to account for uncollectible accounts. When the firm writes off a specific cusomer’s account receivablethere is no effect on total current assets or total expenses
An estimate based on analysis of receivables shows that $780 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. After preparing the adjusting entry at the end of the year, the balance in the Uncollectible Accounts Expense is$890
ABC company uses the estimate of sales method of accounting for uncollectible accounts. ABC estimates that 3% of all credit sales will be uncollectible. On January 1, 2005, the Allowance for Doubtful Accounts had a credit balance of $2400. During 2005, ABC wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. After the adjusting entry, the December 31, 2005, balance in the Uncollectible Accounts Expense would be$3,000
The balance in Allowance for Doubtful Accounts must be carefully considered prior to the end of the year adjustment when applying which methodestimate based on an analysis of receivables
Donovan Company uses the estimate based on analysis of receivables to account for uncollectible accounts. The company has determined that the Irish Company account is uncollectible. To write-off this account, Donovan should debitAllowance for Doubtful Accounts and credit Accounts Receivable
Using the estimate based on sales method of accounting for uncollectible accounts, the entry to reinstate a specific receivable previously written off would include adebit to accounts receivable
At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $540. During the year, $350 of previously written-off acounts were reinstated and accounts totaling $410 are written-off as uncollectible. The end of year balance in the Allowance for Doubtful Accounts should be$480
Allowance for Doubtful accounts has a debit balance of $800 at the end of year (before adjustment), and an analysis of accounts in the customer’s ledger indicates doubtful accounts of $15,000. Which of the following entries records the proper provision for doubtful accounts?debit uncollectible accounts expense, $15,800; credit allowance for doubtful accounts, $15,800
Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of year (before adjustment), and an analysis of customers’ accounts indicates doubtful accounts of $12,900. Which of the following entries records the proper provision for doubtful accounts?debit uncollectible accounts expense, $14000; credit allowance for doubtful accounts, $14000
Allowance for doubtful accounts has a credit balance of $1,500 at the end of the year (before adjustment), and an analysis of customers’ accounts indicates doubtful accounts of $17900. Which of the following entries records the proper provision for doubtful accounts?debit uncollectible accounts expense $16,400; credit allowance for doubtful accounts $16,400
When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited whenmanagement estimates the amount of uncollectibles
The collection of an account that had been previously written off under the allowance method of accounting for uncollectiblesdoes not affect income in the period it is collected
An aging of a company’s accounts receivable indicatesthat $3,000 are estimated to be uncollectible. If allowance for doubtful accounts has a $1,200 debit balance, the adjustment to record bad debts for the period will require adeit to Bad Debts Expense for $4,200
A debit balance int eh allowance for doubtful accountsindicates that actual bad debt write-offs have exceeded the previous provisions for bad debts.
To record estimated uncollectible accounts using the allowance method, the adjusting entry would be adebit to bad debts expense and a credit to allowance for doubtful accounts
An aging of a company’s accounts receivable indicates that $4,000 are estimated to be uncollectible. If alowance for doubtful accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require adebit to bad debts expense for $2,800
An aging of a company’s accounts receivable indicates that $3,000 are estimated to be uncollectible. If allowance for doubtful accounts has a $1,200 credit balance, the adjustment to record the bad debts for the period will require adebit to bad debts expense for $1,800
The balance in Allowance for Doubtful Accounts must be considered prior to end of period adjustment when using which method?Allowance method
You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and wil not make any future payments. Assuming you use the allowance method, the entry you make is todebit allowance for doubtful accoutns and credit accounts receivable
Tanning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. An aging of accounts receivable shows that 5% will be uncollectible. What adjusting entry will Manning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustments?Bad Debts Expense 8,000
Allowance for Doubtful Accounts 8,000
Under the allowance method, when a year-end adjustment for estimated uncollectible accountstotal assets decrease
The amount of a promissory note is calledface value
The amount of the promissory note plus the interest earned on the due date is called thematurity value
A 60-day, 10% note for $8,000, dated April 15, is received from a customer on account. The face value of the note is$8,000
A 90-day, 12% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is$10,300
Interest on a note can be calculated without knowledge of thenote’s maturity date
On November 1, Blazer Company receives a 6% interest bearing note from Ram Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Blazer should record interest revenue of$200
If the maker of a promissory note fails to pay the note on the due date, the note is said to bedishonored
The journal entry to record a note received from a customer to apply on account isdebit notes receivable; credit accounts receivable
A $6,000, 30-day, 12% note recorded on November 12 is not paid by the maker at maturity. The journal entry to recognize this event isdebit Accounts receivable, $6,060, credit Notes Receivable $6,000, Credit Interest Revenue, $60
On November 1, Kim Company accepted a 3-month note receivable as payment for services provided to Chu Company. The terms of the note were $8,000 face value and 6% interest. Kim Company closes its books at December 31 and does not use reversing entries. On February 1, the journal entry to record the collection of the note should include a credit toInterest Revenue for $40.
A note receivable or promissory notemay be used to settle an accounts receivable
When a company receives an interest-bearing note receivable, it willdebit Notes Receivable for the face value of the note
Pane Company receives a $3000, 3-month, 6% promissory note from Dag Company in settlement of an open accounts receivable. What entry will Pane Company make upon receiveing the note?Notes Receivable 3,000
Accounts Receivable-Dag Company 3,000
The maturity value of a $20000, 9%, 40-day note receivable dated July 3 is$20,200
Harper Company lends Hewell Company $20,000 on March 1, accepting a four-month