Question 1

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Accepted Answer

When an account previously written off is collected under the allowance method, it does not affect net income. The collection involves reversing the write-off and recognizing the cash received, but these actions do not impact the income statement since the expense was recognized when the allowance was initially estimated.

Question 2

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

Accepted Answer

The end-of-year balance in Allowance for Doubtful Accounts should be the beginning balance plus the current year's write-offs, minus any recoveries. Therefore, the end-of-year balance would be:

Beginning balance: $760 (credit)
Write-offs: $740
Recoveries: ($120)

End-of-year balance: $880 (credit)

The best choice is C, which represents the closest amount to $880.

Question 3

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Accepted Answer

To calculate the amount of the adjusting entry for the estimated uncollectible accounts receivables, we need to first calculate the estimated bad debt expense.

Bad debt expense = 3% of net credit sales = 0.03 x $300,000 = $9,000

Since Allowance for Doubtful Accounts has a credit balance of $500, we need to increase this account by the amount of the estimated bad debt expense.

Adjusting entry: 
Debit: Bad Debt Expense $9,000 
Credit: Allowance for Doubtful Accounts $9,000

The credit balance of Allowance for Doubtful Accounts will increase by $9,000, resulting in a final credit balance of $9,500 ($500 + $9,000). 
Therefore, the correct answer is option C.

Question 4

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 customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on the estimate above, which of the following adjusting entries should be made?

Accepted Answer

The adjusting entry should increase the Allowance for Doubtful Accounts to $16,000, which is the estimated amount of uncollectible accounts. Since the current balance of the Allowance is $800, the entry should credit $15,200 to the account. The corresponding debit should be to Bad Debt Expense, which represents the expense of uncollectible accounts during the period. Therefore, the correct entry is: debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200.

Question 5

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Accepted Answer

To calculate the amount of the adjusting entry to record the estimate of the uncollectible accounts, we need to find 4% of net credit sales:

4% of $800,000 = $32,000

Since the Allowance for Doubtful Accounts has a debit balance of $2,500, we need to increase it by the estimated bad debt expense:

$2,500 (debit balance) + $32,000 (estimated bad debt expense) = $34,500

Therefore, the adjusting entry to record the estimate of the uncollectible accounts is $34,500, which is choice C.

Question 6

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?

Accepted Answer

The correct adjustment requires increasing the Allowance for Doubtful Accounts to match the estimated uncollectible receivables of $19,700. Since it already has a credit balance of $2,100, an additional $17,600 ($19,700 - $2,100) is needed. This is done by debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts for $17,600.

Question 7

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, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, 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, balance in the Bad Debt Expense will be

Accepted Answer

First, we need to calculate the estimated amount of uncollectible accounts: 
$100,000 x 3% = $3,000 
This is the amount that needs to be added to the Allowance for Doubtful Accounts.

To calculate the ending balance in the Allowance for Doubtful Accounts: 
Beginning balance: $2,400 
Add: Estimated uncollectible accounts: $3,000 
Subtract: Accounts written off: $1,800 
Ending balance: $3,600

The Bad Debt Expense is the increase in the Allowance for Doubtful Accounts from the beginning of the year to the end of the year. Therefore, the Bad Debt Expense will be: 
$3,600 - $2,400 = $1,200 
So, the answer is B) $3,000.

Question 8

Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

Accepted Answer

When using the allowance method, a specific receivable that was previously written off would be reinstated by debiting the Accounts Receivable account and crediting the Allowance for Doubtful Accounts account. This reflects the fact that the previously written off receivable is once again considered collectible and will be included as part of the company's Accounts Receivable balance.

Question 9

In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?

Accepted Answer

The answer of In accounting for uncollectible receivables, the balance...

Question 10

Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?

Accepted Answer

The correct adjustment requires adding $14,000 to the Allowance for Doubtful Accounts to offset its existing $1,100 debit balance and reach the desired $12,900 credit balance. This is done by debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts for $14,000.

Question 11

Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year before adjustment). The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the Bad Debt Expense for the year?

Accepted Answer

The answer of Allowance for Doubtful Accounts has a debit...

Question 12

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

Accepted Answer

The answer of The allowance method of estimating uncollectible accounts...

Question 13

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write off this account, Dalton should debit

Accepted Answer

When using the allowance method, the write-off of an uncollectible account involves debiting Allowance for Doubtful Accounts and crediting Accounts Receivable, which removes the specific uncollectible amount from the accounts receivable balance without affecting the income statement at the time of the write-off.

Question 14

Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year before adjustment). The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?

Accepted Answer

The adjusting entry for recording Bad Debt Expense would be to debit Bad Debt Expense and credit Allowance for Doubtful Accounts for the estimated amount of uncollectible accounts, which in this case is $41,900. Since the Allowance for Doubtful Accounts already has a credit balance of $1,300, this balance needs to be subtracted from the total estimated amount to get the correct amount for the adjusting entry, which is $40,600. Therefore, the correct entry would be to debit Bad Debt Expense, $40,600 and credit Allowance for Doubtful Accounts, $40,600. Option D is the only answer that reflects this entry.

Question 15

Jefferson uses the percent of method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

Accepted Answer

To estimate the uncollectible accounts, we need to multiply credit sales by the estimated percentage of uncollectible accounts.

2% of $5,550,000 = 0.02 x $5,550,000 = $111,000

Therefore, the correct answer is B) Uncollectible accounts are estimated to be $111,000.

Question 16

A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable

Accepted Answer

The answer of A company uses the allowance method to...

Question 17

Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense?

Accepted Answer

The adjusting entry for bad debt expense should increase the allowance for doubtful accounts to reflect the uncollectible receivables. Since the allowance account already has a debit balance of $600, the additional amount needed to reach $13,000 is $12,400. Therefore, the entry should be to debit Bad Debt Expense for $13,600 ($12,400 + $1,200) and credit Allowance for Doubtful Accounts for $13,600. This will result in an ending allowance balance of $13,600 ($600 + $13,000).

Question 18

An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a

Accepted Answer

The adjusting entry to record the bad debt expense for the period is to debit Bad Debt Expense and credit Allowance for Doubtful Accounts. The amount of the debit should be equal to the estimate of uncollectible accounts ($4,000) minus the existing credit balance in the allowance account ($800), which equals $3,200. Therefore, the correct answer is choice B, debit to Bad Debt Expense for $3,200.

Question 19

Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial payment on the account of James. The journal entry to record the initial write-off includes a

Accepted Answer

The allowance method involves creating a contra asset account called Allowance for Doubtful Accounts to estimate and record an anticipated amount of uncollectible accounts. When an account is deemed uncollectible and is written off, we debit Allowance for Doubtful Accounts and credit Accounts Receivable. Therefore, the initial journal entry to record the write-off of James' account would include a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable, James. Since Miles received a partial payment of $559 on the previously written-off account, we would then debit Cash for $559 and credit the remaining balance in Accounts Receivable, James (which would be $559 less the previously written-off amount).

Question 20

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct regarding the entry to record estimated uncollectible receivables?

Accepted Answer

The percent of sales method estimates uncollectible expenses by creating an entry to adjust the allowance for doubtful accounts. Therefore, the correct choice is C, Allowance for Doubtful Accounts will be credited for the estimated amount of $111,000 (2% of $5,550,000). The entry would be: 
Credit: Allowance for Doubtful Accounts $111,000 
Debit: Bad Debt Expense $111,000

Quiz 8: Receivables

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year before adjustment) , and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year before adjustment) , and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?