Question 1

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 to account for uncollectible receivables, the write-off of an uncollectible account involves debiting Allowance for Doubtful Accounts and crediting Accounts Receivable. This action removes the receivable from the books and reduces the allowance account, without affecting the income statement at the time of the write-off.

Question 2

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

Accepted Answer

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

Question 3

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

DThe correct adjustment for bad debt expense requires offsetting the existing debit balance in the Allowance for Doubtful Accounts and establishing the desired ending credit balance. The existing debit balance is $1,100, and the desired ending balance is a credit of $12,900. To achieve this, an adjustment of $14,000 (the sum of $1,100 and $12,900) is needed. This adjustment is recorded by debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts for $14,000.

Question 4

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 requires a company to estimate and record an expense for potential bad debts. When an account is deemed uncollectible, it is written off by debiting the Allowance for Doubtful Accounts and crediting Accounts Receivable. Therefore, the journal entry to record the initial write-off would include a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. A credit to Bad Debt Expense may also be included to adjust the allowance account to the estimated levels. However, there is no cash transaction involved in the write-off process.

Question 5

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivable are uncollectible.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 correct adjusting entry amount is $750. This is calculated by adding the existing debit balance of $110 in the Allowance for Doubtful Accounts to the newly identified uncollectible amount of $640, resulting in a total adjustment of $750 to switch the account to the correct credit balance.

Question 6

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 that 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 correct adjusting entry is to debit Bad Debt Expense and credit Allowance for Doubtful Accounts for the difference between the desired ending balance ($16,000) and the current balance ($800), which is $15,200. This increases the Allowance for Doubtful Accounts to the estimated amount of uncollectible accounts.

Question 7

Abbott Company uses the allowance method of accounting for uncollectible accounts.Abbott estimates that 3% of credit sales will be uncollectible.On January 1,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 during the year.After the adjusting entry,the December 31 balance in Bad Debt Expense will be

Accepted Answer

Abbott estimates 3% of credit sales ($100,000) as uncollectible, which equals $3,000. This amount is the Bad Debt Expense for the year, as the method focuses on adjusting the expense to match estimated uncollectibles from sales, regardless of the starting balance in the Allowance for Doubtful Accounts or the actual write-offs during the year.

Question 8

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

To record the bad debt expense for the period, we need to increase the allowance for doubtful accounts by the estimated uncollectible amount of $4,000. However, since the allowance account already has a credit balance of $800, we only need to increase it by the net amount of $3,200 ($4,000 - $800). Therefore, we would debit the Bad Debt Expense account for $3,200 and credit the Allowance for Doubtful Accounts for $3,200.

Question 9

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

DThe correct adjusting entry to record the bad debt expense requires offsetting the existing debit balance in the Allowance for Doubtful Accounts and then adjusting it to the new estimated balance. The existing debit balance is $2,300, and the new estimated balance of uncollectible accounts is $31,900. To adjust the allowance account to the correct new balance, you need to add these two amounts together, resulting in a total adjustment of $34,200 ($2,300 + $31,900). Therefore, you debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $34,200 to both eliminate the existing debit balance and adjust the allowance to the new estimated uncollectible amount.

Question 10

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 credit sales.If credit sales are $800,000,the amount of the adjusting entry to record the estimate of the uncollectible accounts

Accepted Answer

To estimate the uncollectible accounts, we need to multiply the credit sales by the estimated percentage of bad debt expense. 
4% of $800,000 = $32,000. 
Since the Allowance for Doubtful Accounts already has a debit balance of $2,500, we only need to adjust it by the additional estimated amount of uncollectible accounts, which is $32,000. Therefore, the adjusting entry will be a credit to the Allowance for Doubtful Accounts for $32,000. 
The total balance of the Allowance for Doubtful Accounts after adjustment will be $34,500 (debit balance of $2,500 + credit of $32,000).

Question 11

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 the desired balance of $19,700. Since it already has a credit balance of $2,100, an additional $17,600 (19,700 - 2,100) needs to be added. This is done by debiting Bad Debt Expense and crediting Allowance for Doubtful Accounts for $17,600.

Question 12

At the beginning of the year,the balance in Allowance for Doubtful Accounts is a credit of $760.During the year,previously written off accounts of $120 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 beginning balance of Allowance for Doubtful Accounts was $760.

During the year, previously written off accounts of $120 were reinstated, which means that $120 needs to be added back to the Allowance for Doubtful Accounts.

Also, accounts totaling $740 were written off as uncollectible, which means that $740 needs to be subtracted from the Allowance for Doubtful Accounts.

Therefore, the end-of-year balance (before adjustment) in Allowance for Doubtful Accounts would be:

Beginning balance + reinstated accounts - written off accounts =

$760 + $120 - $740 = $140

Question 13

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 a specific receivable is written off, it is removed from the Accounts Receivable account. To reinstate the receivable, a debit is made to Accounts Receivable to bring it back onto the books. There is no need to adjust the allowance account, as this only applies to estimates of overall uncollectible amounts, not specific receivables. There is also no need to credit Bad Debt Expense, as this account is only used to record the estimated expense of uncollectible accounts, not the actual write-off of specific receivables.

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

To record the bad debt expense for the year, we need to increase the Allowance for Doubtful Accounts by the estimated uncollectible amount of $41,900. Since the Allowance for Doubtful Accounts already has a credit balance of $1,300, we only need to adjust it by $40,600 (i.e. $41,900 - $1,300) by debiting the account. The corresponding credit entry should be made to the Bad Debt Expense account, also for $40,600. Therefore, the adjusting entry should be: debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600. Option D is the only choice that matches these requirements.

Question 15

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?

Accepted Answer

To estimate uncollectible accounts, we need to multiply the sales by the expected percentage of uncollectible accounts. 
$5,550,000 x 2% = $111,000 
Therefore, the estimated uncollectible accounts are $111,000. Option B is correct. 
Options A and C are incorrect because they use either the wrong percentage or the wrong method to estimate uncollectible accounts. Option D is incorrect because it estimates bad debt expense rather than uncollectible accounts.

Question 16

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 balance in Allowance for Doubtful Accounts by the amount of the uncollectible receivables, which is $13,000. Since Allowance for Doubtful Accounts already has a debit balance of $600, the credit to this account should be for the total of $13,600. Therefore, the correct entry is to debit Bad Debt Expense for $13,600 and credit Allowance for Doubtful Accounts for $13,600. Option D is the correct choice.

Question 17

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 adjusting the allowance for doubtful accounts. Therefore, the entry to record estimated uncollectible receivables would include a credit to the allowance for doubtful accounts, as in choice C. Choices A and D are incorrect because no cash or accounts receivable are being directly affected. Choice B is incorrect because Bad Debt Expense would be debited, not credited, when recording the estimate of uncollectible receivables.

Question 18

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

Accepted Answer

The collection of an account previously written off under the allowance method does not affect net income in the period it is collected because the expense was recognized when the allowance was initially estimated. The collection merely affects the balance sheet accounts (Cash and Allowance for Doubtful Accounts), not the income statement.

Question 19

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 credit sales.If credit sales are $300,000,the amount of the adjusting entry to record the estimated uncollectible accounts receivable

Accepted Answer

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

Question 20

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

Accepted Answer

Writing off a specific customer's account receivable under the allowance method does not affect total current assets or total expenses because the expense was already recognized when the allowance for doubtful accounts was established. The write-off merely adjusts the accounts receivable and allowance for doubtful accounts balances, with no impact on the income statement or the total current assets.

Quiz 9: Receivables

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

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

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?

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

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

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 credit sales.If credit sales are $800,000,the amount of the adjusting entry to record the estimate of the uncollectible accounts

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?

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

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?

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?

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?

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 credit sales.If credit sales are $300,000,the amount of the adjusting entry to record the estimated uncollectible accounts receivable

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