Barton Corporation uses the aging of accounts receivable method of accounting for uncollectible accounts. As of December 31, Year 1, prior to estimating uncollectible accounts expense, Barton's balance of accounts receivable was $68,900, the balance of allowance for doubtful accounts was $2,500, and total sales for Year 1 were $875,000. On December 31, Year 1, Barton aged its receivables and determined the following:
Indicate whether each of the following statements is true or false.
_____ a) Barton will report Net Realizable Value of Accounts Receivable equal to $63,170 on its December 31, Year 1 balance sheet.
_____ b) Barton will report Uncollectible Accounts Expense of $5,730 on its Year 1 income statement.
_____ c) The December 31 adjusting entry related to uncollectible accounts will increase liabilities and decrease equity by $3,230.
_____ d) The method Barton uses to account for uncollectible accounts is known as the balance sheet approach.
_____ e) Write-offs of uncollectible accounts in Year 2 will reduce Barton's net realizable value of receivables.

Question

Barton Corporation uses the aging of accounts receivable method of accounting for uncollectible accounts. As of December 31, Year 1, prior to estimating uncollectible accounts expense, Barton's balance of accounts receivable was $68,900, the balance of allowance for doubtful accounts was $2,500, and total sales for Year 1 were $875,000. On December 31, Year 1, Barton aged its receivables and determined the following:
  Indicate whether each of the following statements is true or false.
_____ a) Barton will report Net Realizable Value of Accounts Receivable equal to $63,170 on its December 31, Year 1 balance sheet.
_____ b) Barton will report Uncollectible Accounts Expense of $5,730 on its Year 1 income statement.
_____ c) The December 31 adjusting entry related to uncollectible accounts will increase liabilities and decrease equity by $3,230.
_____ d) The method Barton uses to account for uncollectible accounts is known as the balance sheet approach.
_____ e) Write-offs of uncollectible accounts in Year 2 will reduce Barton's net realizable value of receivables.

Quizplus · Accepted Answer

The Answer of Barton Corporation uses the aging of accounts receivable method of accounting for uncollectible accounts. As of December 31, Year 1, prior to estimating uncollectible accounts expense, Barton's balance of accounts receivable was $68,900, the balance of allowance for doubtful accounts was $2,500, and total sales for Year 1 were $875,000. On December 31, Year 1, Barton aged its receivables and determined the following:
  Indicate whether each of the following statements is true or false.
_____ a) Barton will report Net Realizable Value of Accounts Receivable equal to $63,170 on its December 31, Year 1 balance sheet.
_____ b) Barton will report Uncollectible Accounts Expense of $5,730 on its Year 1 income statement.
_____ c) The December 31 adjusting entry related to uncollectible accounts will increase liabilities and decrease equity by $3,230.
_____ d) The method Barton uses to account for uncollectible accounts is known as the balance sheet approach.
_____ e) Write-offs of uncollectible accounts in Year 2 will reduce Barton's net realizable value of receivables.

Barton Corporation Uses the Aging of Accounts Receivable Method of Accounting