Deck 15: Accounts Receivable and Uncollectible Accounts

Question 1

The ____________________ principle is emphasized when the estimate of the loss from uncollectible accounts is based on sales.

Answer 1

matching

Question 2

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.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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.

Question 6

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

Question 7

If the estimate of loss from uncollectible accounts is based on sales, the existing balance in the Allowance for Doubtful Accounts account is added to the percentage of sales to determine the amount of the adjustment.

Question 8

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 9

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

Question 10

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

Question 11

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

Question 12

Uncollectible Accounts Expense can be called Loss from Uncollectible Accounts.

Question 13

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 14

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

Question 15

Allowance for Doubtful Accounts is a liability account.

Question 16

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

Question 17

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 18

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

Question 19

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

Question 20

The collection of an account previously written off is recorded in the cash receipts journal only.

Question 21

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

Question 22

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 23

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 24

When an account that was written off is later collected, it takes _____________________ entries to record the transaction.

Question 25

Allowance for Doubtful Accounts is called a(n) ____________________ account because it literally reappraises the accounts receivable to reflect reasonable expectations.

Question 26

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 27

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 28

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 Analyze of accounts receivable.
C) a percent of total accounts receivable outstanding.
D) a percent of net income.

Question 29

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 30

The method that must be used to record bad debt losses for tax purposes is the

A) allowance method based on a percent of net credit sales.
B) allowance method based on an aging of accounts receivable.
C) allowance method based on a percent of total accounts receivable outstanding.
D) direct charge-off method.

Question 31

The difference between the balance of the Accounts Receivable account and the balance of Allowance for Doubtful Accounts is the ____________________ value of accounts receivable.

Question 32

The estimated loss from uncollectible accounts for the year will be __________________ if the firm has net sales of $400,000 for the year and bases its estimate of loss on 0.6 percent of net sales.

Question 33

When an account that was written off is later collected, the entry to reverse the write-off is recorded as a ____________________ to Accounts Receivable and the customer's account.

Question 34

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 35

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 36

The balance of the Accounts Receivable account is usually ____________________ when the direct charge-off method of recording losses from uncollectible accounts is used.

Question 37

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

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

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 40

The estimated loss from uncollectible accounts for the first year of operations will be __________________ if the balance of Accounts Receivable is $60,000 and the firm bases its estimate of loss on 5 percent of accounts receivable.

Question 41

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 42

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 43

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 44

Common internal controls for accounts receivable include:

A) sending invoices and monthly statements.
B) developing procedures that ensure that all credit sales are recorded and customers' accounts are debited.
C) authorizing charge-off of accounts.
D) all of the above are common internal controls for accounts receivable.

Question 45

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 46

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 47

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 48

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 49

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 50

On December 31, 2014, 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 51

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 52

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 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

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 55

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 56

On December 31, 2014, 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 57

On December 31, 2014, 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 58

On December 31, 2013, 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 59

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 60

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 61

At the end of the current year, the trial balance of Cary's Craft Shop included the accounts and balances shown below. Credit sales were $290,000. Returns and allowances on these sales were $4,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.3 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 62

At the end of the current year, the trial balance of Johannes' Sporting Goods Shop included the accounts and balances shown below. Credit sales were $180,000. Returns and allowances on these sales were $2,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 3 percent of accounts receivable. 1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 63

At the end of the current year, the trial balance of Kerry Hardware included the accounts and balances shown below. Credit sales were $7,000,000. Returns and allowances on these sales were $55,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.4 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 64

At the end of 2014, the trial balance of Bryant Paint Store included the accounts and balances shown below. Credit sales were $145,000. Returns and allowances on these sales were $2,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.3 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for 2014?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts for 2014?

Question 65

On December 31, 2013, 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 66

At the end of the current year, the trial balance of Aaron's Kitchen Supply Corporation included the accounts and balances shown below. Credit sales were $4,600,000. Returns and allowances on these sales were $27,500. Assume that the firm bases its estimate of the loss from uncollectible accounts on 4 percent of accounts receivable. 1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 67

At the end of the current year, the trial balance of Tracey's Consulting Services included the accounts and balances shown below. Credit sales were $90,000. Returns and allowances on these sales were $1,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.4 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 68

At the end of the current year, the trial balance of Daniels' Furniture Store included the accounts and balances shown below. Credit sales were $180,000. Returns and allowances on these sales were $2,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.4 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 69

At the end of the current year, the trial balance of Kate's Cafe included the accounts and balances shown below. Credit sales were $90,000. Returns and allowances on these sales were $1,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 3 percent of accounts receivable. 1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 70

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 71

On December 31, 2013, 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

Question 72

The Salinas Company uses the direct charge-off method to record uncollectible accounts. The following transactions occurred during 2013. Record the transactions on page 6 of a general journal, assuming the company also uses a Cash Receipts journal. Omit descriptions.

Question 73

The totals from the Kalvin Company's Schedule of Accounts Receivable by Age as of the end of the current year are shown below. As of the end of the current year, there is a debit balance of $75 in the Allowance for Doubtful Accounts.
1. Compute the estimated uncollectible accounts using the following rates. 2. Compute the amount of the adjustment for uncollectible accounts expense.

Question 74

At the end of the current year, the trial balance of Diane's Dress Shop included the accounts and balances shown below. Credit sales were $9,200,000. Returns and allowances on these sales were $55,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.4 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 75

At the end of the current year, the trial balance of Bianca's Exports included the accounts and balances shown below. Credit sales were $9,200,000. Returns and allowances on these sales were $55,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 4 percent of accounts receivable. 1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question 76

The totals from the Savoy Company's Schedule of Accounts Receivable by Age as of the end of the current year are shown below. As of the end of the current year, there is a debit balance of $75 in the Allowance for Doubtful Accounts.
1. Compute the estimated uncollectible accounts using the following rates. 2. Compute the amount of the adjusting entry for uncollectible accounts expense.

Question 77

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 78

At the end of the current year, the trial balance of Monique's Fashion Industries included the accounts and balances shown below. Credit sales were $4,600,000. Returns and allowances on these sales were $27,500. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.3 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts? (Round your answers to the nearest dollar.)

Question 79

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 80

At the end of the current year, the trial balance of Carlton's Auto Sales included the accounts and balances shown below. Credit sales were $9,200,000. Returns and allowances on these sales were $55,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.3 percent of net credit sales. 1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?