Deck 15: Accounts Receivable and Uncollectible Accounts

Question 1

The estimated loss from uncollectible accounts can be based on net credit sales or ___________________.

Answer 1

accounts receivable

Question 2

To achieve good internal control over accounts receivable,it is important to separate the recording of accounts receivable transactions and the collection of cash from customers.

Answer 2

True

Question 3

When using the allowance method,the collection of an account previously written off is recorded in the cash receipts journal only.

Answer 3

False

Question 4

The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to Allowance for Doubtful Accounts.

Question 5

The balance of Allowance for Doubtful Accounts is deducted from the balance of Accounts Receivable on the balance sheet.

Question 6

Allowance for Doubtful Accounts may,at times,have a debit balance.

Question 7

When the estimate of the losses from uncollectible accounts is based on the aging method,the primary concern is proper valuation of the accounts receivable on the balance sheet.

Question 8

The entry to record the write-off of a specific uncollectible account using the allowance method includes a ____________________ to Allowance for Doubtful Accounts.

Question 9

When there is a partial collection of a balance previously written off,the reinstatement entry will be for the entire amount of the write-off.

Question 10

When the allowance method of recognizing losses from uncollectible accounts is used,the net value of accounts receivable on the balance sheet will more nearly reflect the amount that will ultimately be collected.

Question 11

The allowance method may be used to record bad debt losses for income tax purposes.

Question 12

After the adjusting entry is made to record the estimate of losses from uncollectible accounts,Allowance for Doubtful Accounts should have a(n)____________________ balance.

Question 13

The adjusting entry to record estimated losses from uncollectible accounts includes a(n)____________________ to the Allowance for Doubtful Accounts account.

Question 14

The experience of other firms in the same line of business may be used in estimating losses from uncollectible accounts for a new firm.

Question 15

Allowance for Doubtful Accounts is a liability account.

Question 16

Allowance for Doubtful Accounts may be used for the valuation of all types of receivables.

Question 17

Uncollectible Accounts Expense can be called Loss from Uncollectible Accounts.

Question 18

When losses from uncollectible accounts are provided for in advance,the entry to record the write-off of a particular customer's account includes a debit to Uncollectible Accounts Expense.

Question 19

The practice of estimating losses from uncollectible accounts before specific accounts become uncollectible is referred to as the ____________________ method.

Question 20

The longer an account is past due,the ____________________ likely it is to be collected.

Question 21

The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to

A) Uncollectible Accounts Expense and a credit to Accounts Receivable.
B) Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
C) Allowance for Doubtful Accounts and a credit to Accounts Receivable.
D) Accounts Receivable and a credit to Allowance for Doubtful Accounts.

Question 22

On December 31,prior to adjustment,Allowance for Doubtful Accounts has a credit balance of $200.An aging Analyze of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $200.
B) $800.
C) $1,000.
D) $1,200.

Question 23

An existing balance in Allowance for Doubtful Accounts is not considered when the estimate of loss is based on

A) a percent of net credit sales.
B) an aging of accounts receivable.
C) a percent of total accounts receivable outstanding.
D) a percent of net income.

Question 24

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

A) Contra asset,credit
B) Asset,debit
C) Liability,credit
D) Contra asset,debit

Question 25

A firm reported sales of $300,000 during the year.Prior to adjustment,Allowance for Doubtful Accounts has a debit balance of $100.Based on an aging of accounts receivable,the firm estimated its losses from uncollectible accounts to be $3,150.The entry to record the estimated bad debt losses will be:

A)

B)

C)

D)

Question 26

The balance of the Allowance for Doubtful Accounts account is reported as

A) a liability on the balance sheet.
B) a deduction from Sales on the income statement.
C) a deduction from Accounts Receivable on the balance sheet.
D) an expense on the income statement.

Question 27

A firm reported sales of $500,000 during the year.Prior to adjustment,Allowance for Doubtful Accounts has a credit balance of $100.Based on an aging of accounts receivable,the firm estimated its losses from uncollectible accounts to be $5,200.The adjusting entry to record the estimated bad debt losses will be:

A)

B)

C)

D)

Question 28

On December 31,prior to adjustment,Allowance for Doubtful Accounts has a debit balance of $400.An aging of the accounts receivable produces an estimate of $2,600 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $2,200.
B) $2,600.
C) $3,000.
D) $400.

Question 29

The method of accounting for losses from uncollectible accounts that produces a proper valuation of the accounts receivable on the balance sheet is

A) the allowance method based on aging the accounts receivable.
B) the allowance method based on a percentage of net credit sales.
C) the direct charge-off method.
D) either the allowance method or the direct charge-off method.

Question 30

Under the Allowance Method of accounting for uncollectible accounts,a firm should base their estimate of uncollectible accounts on all of the following EXCEPT:

A) net credit sales for the year
B) total current assets as of the end of the year
C) total accounts receivable at the end of the year
D) aging of accounts receivable at the end of the year

Question 31

A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end.Prior to adjustment,Allowance for Doubtful Accounts has a credit balance of $300.The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales.The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

A) $1,200.
B) $1,500.
C) $1,800.
D) $3,000.

Question 32

When an account that was written off is later collected,it takes _____________________ entries to record the transaction (when using the allowance method).

Question 33

On December 31,prior to adjustment,Allowance for Doubtful Accounts has a credit balance of $400.An aging analysis of the accounts receivable produces an estimate of $2,000 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $400.
B) $1,600.
C) $2,000.
D) $2,400.

Question 34

A firm reported sales of $600,000 during the year and has a balance of $40,000 in its Accounts Receivable account at year-end.Prior to adjustment,Allowance for Doubtful Accounts has a credit balance of $600.The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales.The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

A) $6,000.
B) $3,600.
C) $3,000.
D) $2,400.

Question 35

A firm reported net credit sales of $450,000 during the year and has a balance of $40,000 in its Accounts Receivable account at year-end.Prior to adjustments,Allowance for Doubtful Accounts has a debit balance of $200.The firm estimates its losses from uncollectible accounts to be one-half of 1 percent of net credit sales.The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

A) $4,500.
B) $2,450.
C) $2,250.
D) $1,800.

Question 36

Which of the following statements is not correct?

A) The use of the direct charge-off method of recording losses from uncollectible accounts usually results in the balance in the Accounts Receivable account being overstated.
B) The direct charge-off method of recording losses from uncollectible accounts is the method required by Federal income tax laws.
C) The direct charge-off method of recording losses from uncollectible accounts is an application of the matching principle.
D) When using the direct charge-off method,there is no Allowance for Doubtful Accounts account.

Question 37

A procedure that groups accounts receivable according to the length of time they have been outstanding is called ____________________ the accounts receivable.

Question 38

A firm reported net credit sales of $225,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end.Prior to adjustments,Allowance for Doubtful Accounts has a debit balance of $100.The firm estimates its losses from uncollectible accounts to be one-half of 1 percent of net credit sales.The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

A) $1,225.
B) $1,125.
C) $900.
D) $2,250.

Question 39

Allowance for Doubtful Accounts is classified as

A) a Contra Asset on the Balance Sheet.
B) a Liability on the Balance Sheet.
C) an Expense on the Income Statement.
D) A Contra Expense on the Income Statement.

Question 40

Which of the following statements is not correct?

A) The allowance method involves anticipating losses from uncollectible accounts by recognizing an expense for these losses before the actual accounts are written off.
B) The adjusting entry to record the estimated loss from uncollectible accounts includes a credit to Accounts Receivable.
C) Losses from uncollectible accounts can be estimated by analyzing sales or accounts receivable.
D) The balance of Uncollectible Accounts Expense appears among the operating expenses on the income statement.

Question 41

Millie's Draperies uses the allowance method of recording bad debts.On June 13,the $200 account balance of Jane Murphy was charged off.However,on August 5,Murphy paid $80 of the amount previously written off.The entry to record the payment from Murphy would include:

A) debit Accounts Receivable $80;credit Allowance for Doubtful Accounts $80
B) debit Accounts Receivable $200;credit Allowance for Doubtful Accounts $200
C) debit Allowance for Doubtful Accounts $80;credit Cash $80
D) debit Cash $80;credit Uncollectible Accounts Expense $80

Question 42

On December 31,prior to adjustments,the balance of Accounts Receivable is $52,000 and Allowance for Doubtful Accounts has a debit balance of $600.The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $600.
B) $2,000.
C) $2,600.
D) $3,200.

Question 43

Millie's Draperies uses the allowance method of recording bad debts.On June 13,the company concluded that the $200 account balance of Jane Murphy should be charged off.The entry to write off Murphy's account will be:

A)

B)

C)

D)

Question 44

Uncollectible Accounts Expense is classified as

A) a Contra Asset on the Balance Sheet.
B) a Contra Expense on the Income Statement.
C) an Expense on the Income Statement.
D) a Liability on the Balance Sheet.

Question 45

On December 31,prior to adjustments,the balance of Accounts Receivable is $26,000 and Allowance for Doubtful Accounts has a debit balance of $300.The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $1,000.
B) $1,300.
C) $1,600.
D) $300.

Question 46

On December 31,2016,prior to adjustments,Accounts Receivable has a debit balance of $356,000 and the Allowance for Doubtful Accounts has a credit balance of $1,200.The firm estimates its losses from uncollectible accounts to be 4% of accounts receivable at the end of the year.The amount of the adjusting entry needed to record the estimated losses from uncollectible accounts is:

A) $13,040
B) $14,240
C) $15,440
D) $17,800

Question 47

Nigel Lighting uses the direct charge-off method of recording bad debts.On Sept.4,the $300 account balance of Louis Blue was charged off.However,on November 15,Blue paid $70 of the amount previously written off.The entry to record the payment from Blue would include:

A) debit Accounts Receivable $300;credit Uncollectible Account Expense $300
B) debit Allowance for Doubtful Accounts $70;credit Accounts Receivable $70
C) debit Uncollectible Account Expense $70;credit Cash $70
D) debit Cash $70;credit Accounts Receivable $70

Question 48

Nigel Lighting uses the direct charge-off method of recording bad debts.On September 4,the company concluded that the $300 account balance of Louis Blue should be charged off.The entry to write off Blue's account will be:

A)

B)

C)

D)

Question 49

Allowance for Doubtful Accounts has a credit balance of $1,000 immediately before the write-off of a $300 account receivable.The credit balance of Allowance for Doubtful Accounts immediately after the write-off is

A) $700.
B) $1,000.
C) $1,300.
D) $300.

Question 50

A firm using the allowance method to provide for losses from uncollectible accounts collected the cash due from a customer whose account was previously written off.The entry to reinstate the customer's account included a credit to

A) Sales.
B) Accounts Receivable.
C) Uncollectible Accounts Expense.
D) Allowance for Doubtful Accounts.

Question 51

When a firm uses the allowance method to provide for losses for uncollectible accounts,the collection of an account previously written off as uncollectible requires an entry to

A) reinstate the account receivable.
B) increase the balance of the Sales account.
C) reduce the balance of Uncollectible Accounts Expense.
D) decrease the balance of the Allowance for Doubtful Accounts.

Question 52

On December 31,2016,prior to adjustments,Accounts Receivable has a debit balance of $356,000 and the Allowance for Doubtful Accounts has a credit balance of $1,200.The firm estimates its losses from uncollectible accounts to be 4% of accounts receivable at the end of the year.The balance in the Allowance for Doubtful Accounts after the adjusting entry for the estimated losses from uncollectible accounts is:

A) $13,040
B) $14,240
C) $15,440
D) $17,800

Question 53

Allowance for Doubtful Accounts has a credit balance of $2,000 immediately before the write-off of a $600 account receivable.The balance of Allowance for Doubtful Accounts immediately after the write-off is

A) $600 debit.
B) $1,400 credit.
C) $1,400 debit.
D) $2,600 credit.

Question 54

On December 31,prior to adjustment,Allowance for Doubtful Accounts has a debit balance of $800.An aging of the accounts receivable produces an estimate of $5,200 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $800.
B) $4,400.
C) $5,200.
D) $6,000.

Question 55

When the allowance method of recognizing losses from uncollectible accounts is used,the entry to record the write-off of a specific account consists of a debit to

A) Uncollectible Accounts Expense and a credit to Accounts Receivable.
B) Allowance for Doubtful Accounts and a credit to Accounts Receivable.
C) Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
D) Accounts Receivable and a credit to Allowance for Doubtful Accounts.

Question 56

On December 31,2016,prior to adjustments,Accounts Receivable has a debit balance of $370,000 and the Allowance for Doubtful Accounts has a credit balance of $400.The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year.The amount of the adjusting entry needed to record the estimated losses from uncollectible accounts is

A) $18,100
B) $18,500
C) $18,900
D) $17,800

Question 57

On December 31,prior to adjustments,the balance of Accounts Receivable is $32,000 and Allowance for Doubtful Accounts has a credit balance of $190.The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $190.
B) $1,410.
C) $1,600.
D) $1,790.

Question 58

On December 31,2016,prior to adjustments,Accounts Receivable has a debit balance of $356,000 and the Allowance for Doubtful Accounts has a debit balance of $1,200.The firm estimates its losses from uncollectible accounts to be 4% of accounts receivable at the end of the year.The amount of the adjusting entry needed to record the estimated losses from uncollectible accounts is:

A) $13,040
B) $14,240
C) $15,440
D) $17,800

Question 59

Common internal controls for accounts receivable would not include:

A) sending invoices and monthly statements to customers.
B) developing procedures that ensure that all credit sales are recorded and customers' account are debited.
C) allowing all sales personnel to charge-off any accounts deemed uncollectible.
D) authorizing all credit sales.

Question 60

On December 31,prior to adjustments,the balance of Accounts Receivable is $16,000 and Allowance for Doubtful Accounts has a credit balance of $95.The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A) $705.
B) $800.
C) $895.
D) $95.

Question 61

Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year,before adjustments.Sales for the year amounted to $870,000,sales discounts amounted to $30,000 and sales returns and allowances amounted to $40,000.If the uncollectible accounts expense is estimated at 2% of net sales,the amount of the adjusting entry to record the estimated losses from uncollectible accounts will be

A) $17,400
B) $16,500
C) $16,000
D) $15,500

Question 62

Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year,before adjustments.Sales for the year amounted to $870,000,sales discounts amounted to $30,000 and sales returns and allowances amounted to $40,000.If the uncollectible accounts expense is estimated at 2% of net sales,the balance in the Allowance for Doubtful Accounts after the entry to record estimated losses from uncollectible accounts will be

A) $17,400
B) $16,500
C) $16,000
D) $15,500

Question 63

Allowance for Doubtful Accounts has a credit balance of $1,100 at the end of the year,before adjustments.Sales for the year amounted to $760,000,sales discounts amounted to $12,000 and sales returns and allowances amounted to $36,000.If the uncollectible accounts expense is estimated at 2% of net sales,the amount of the adjusting entry to record the estimated losses from uncollectible accounts will be

A) $15,340
B) $13,140
C) $14,240
D) $15,200

Question 64

On December 31,2016,prior to adjustments,the Allowance for Doubtful Accounts has a debit balance of $750.An aging of the accounts receivable produces an estimate of $6,500 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts includes a:

A) a credit to Allowance for Doubtful Accounts for $6,500
B) a debit to Uncollectible Accounts Expense for $5,750
C) a credit to Allowance for Doubtful Accounts for $7,250
D) a debit to Uncollectible Accounts Expense for $6,500

Question 65

On December 31,2016,prior to adjustments,the Allowance for Doubtful Accounts has a debit balance of $750.An aging of the accounts receivable produces an estimate of $6,500 of probable losses from uncollectible accounts.The balance in the Allowance for Doubtful Accounts after the entry to record estimated losses from uncollectible accounts will be:

A) a credit of $6,500
B) a credit of $5,750
C) a credit of $7,250
D) a debit of $6,500