Question 1

KayCo began business January 1,2012.During 2012,sales were $650,000.The year-end accounts receivable balance was $104,000.The company estimates that 10% of accounts receivable will be uncollectible.The financial statements for the year ended December 31,2012 will show ________.

Accepted Answer

The company estimates that 10% of the accounts receivable ($104,000) will be uncollectible, which amounts to $10,400. This amount is recorded as bad debts expense on the income statement.

Question 2

Rusk,Inc.had the following balances at December 31,2012,before recording any adjustments:  Rusk estimated that $3,000 of the receivables would be uncollectible.The financial statements for the year ended December 31,2012 will show:

Accepted Answer

The correct entries would be to record bad debt expense of $3,000 and create an allowance for uncollectible accounts of $3,000. This would result in net accounts receivable of $27,000 ($30,000 - $3,000). Therefore, both choices A and B are correct, making D the best answer.

Question 3

Midway Company had a balance of $(500)in its allowance for uncollectible accounts.Aging of its accounts receivable revealed that the allowance should be $(1,400).The amount of bad debts expense for the period should be ________.

Accepted Answer

The bad debts expense for the period is calculated by adjusting the existing allowance for uncollectible accounts to the newly determined required balance. The existing balance is $(500), and it needs to be increased to $(1,400). Therefore, the additional expense recognized is $(1,400) - $(500) = $900.

Question 4

Lee's Lions had a balance of a positive $200 in its Allowance for uncollectible accounts.Based on an aging of accounts receivable,management estimates that the Allowance for uncollectible accounts balance should be $(2,000).Bad debts expense should be ________.

Accepted Answer

The current balance is $200, but it needs to be $(2,000), so the bad debts expense should be $2,200 to adjust the allowance to the estimated amount.

Question 5

KayCo began business January 1,2012.During 2012,sales were $650,000.The year-end accounts receivable balance was $104,000.The company estimates that 1.5% of sales will become bad debts.The financial statements for the year ended December 31,2012 will show ________.

Accepted Answer

To calculate the bad debts expense, we first need to find the amount of accounts receivable that is expected to become bad debts. Since sales were $650,000 and the estimate for bad debts is 1.5%, we can calculate the expected amount of bad debts as:

$650,000 * 1.5% = $9,750

Therefore, the bad debts expense on the income statement will be $9,750. The net accounts receivable on the balance sheet can be calculated as:

$104,000 (year-end accounts receivable) - $9,750 (bad debts estimate) = $94,250

So, choice B is the correct answer.

Question 6

Which accounting principle requires that bad debts expense be recognized in the same period as the sale?

Accepted Answer

The matching principle requires that expenses be recognized in the same period as the related revenue. Bad debts expense is an expense related to credit sales, so it should be recognized in the same period as the sale in order to properly match the expense to the revenue.

Question 7

The Allowance for uncollectible accounts ________.

Accepted Answer

The Allowance for uncollectible accounts is a contra-asset account that represents the amount of accounts receivable that the company does not expect to collect. It is subtracted from Accounts receivable to calculate the Net realizable value of accounts receivable, which is the amount of accounts receivable that the company expects to collect.

Question 8

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,bad debts expense for the year will be:

Accepted Answer

The answer of Z Company obtained the following balances from...

Question 9

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,what is the net accounts receivable on the year-end balance sheet?

Accepted Answer

The net accounts receivable can be calculated by subtracting the estimated uncollectible amount from the total accounts receivable. The calculation would be: $48,000 - (2% x $48,000) = $45,000. Therefore, the correct answer is C. The statement that accounts receivable appear on the income statement is incorrect as accounts receivable are shown on the balance sheet under current assets.

Question 10

XYZ Company's accounting records on January 1 showed:  On January 2,XYZ wrote off an account receivable of $1,000 from Bounder,Inc.As a result of this write-off,the net realizable value of XYZ's accounts receivable will ________.

Accepted Answer

The answer of XYZ Company's accounting records on January 1...

Question 11

The bookkeeper was unable to reconcile the company's checking account,so she changed the company's books to agree with the cash balance on the bank statement.This is an internal control ________.

Accepted Answer

Changing the company's books to agree with the cash balance on the bank statement is a violation of the internal control principle of reconciliation and accuracy. It is important for the company to reconcile their accounts regularly to detect and correct any errors or discrepancies. By changing the books to match the bank statement without properly reconciling, the bookkeeper has increased the risk of errors and fraud going undetected. This is a weakness in the company's internal controls.

Question 12

The sales method for estimating bad debts is calculated using ________.

Accepted Answer

The sales method for estimating bad debts is calculated using a percentage of credit sales. This method estimates the amount of bad debt based on a percentage of total credit sales for the period. The aging of accounts receivable is a method for analyzing and managing accounts receivable, but not for calculating bad debt expense. A percentage of net accounts receivable is not a widely used method for calculating bad debt expense. The current balance in accounts receivable is not a method for estimating bad debt expense.

Question 13

A company has an allowance for uncollectible accounts of $1,000,a positive number,at the end of the year,before the adjusting entry is made to record this year's bad debts expense.The allowance account has a positive balance because ________.

Accepted Answer

The allowance account has a positive balance because the allowance created at the end of last year was too small to cover all of the accounts written off this year. This means that the company experienced more bad debts than expected and the allowance needs to be adjusted to reflect this.

Question 14

Team Shirts had a balance in its allowance for uncollectible accounts of $(200).Aging the accounts receivable showed that the allowance should be $(1,800).Bad debts expense should be ________.

Accepted Answer

The required bad debts expense can be calculated as the difference between the required balance of the allowance for uncollectible accounts and the current balance. 
Required bad debts expense = Required allowance for uncollectible accounts - Current allowance for uncollectible accounts 
= $(1,800) - $(200) 
= $(1,600)

Therefore, the answer is B) $1,600

Question 15

Team Shirts had a balance of $(700)in its Allowance for uncollectible accounts.Aging of its accounts receivable revealed that the allowance should be $(1,250).The amount of bad debts expense for the period should be ________.

Accepted Answer

The bad debts expense for the period is the amount needed to adjust the Allowance for Uncollectible Accounts from its current balance of $(700) to the desired balance of $(1,250). This requires an additional $(550) ($(1,250) - $(700)).

Question 16

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,the allowance for uncollectible accounts will be:

Accepted Answer

The answer of Z Company obtained the following balances from...

Question 17

Y Company has the following accounting balances at the end of the year before adjustments:  The company estimates that 20% of accounts receivable will be uncollectible.After the correct adjusting entry has been made,which of the following is correct about Bad debts expense for the year and Allowance for uncollectible accounts at the end of the year?

Accepted Answer

The answer of Y Company has the following accounting balances...

Question 18

X Company has the following accounting balances at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,which of the following is correct about Bad debts expense for the year and Allowance for uncollectible accounts at the end of the year?

Accepted Answer

The answer of X Company has the following accounting balances...

Question 19

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments:  The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,bad debts expense for the year will be:

Accepted Answer

The answer of Z Company obtained the following balances from...

Question 20

The direct write-off method and the allowance method are methods used to adjust the balance in accounts receivable to reflect uncollectible accounts.

Accepted Answer

The answer of The direct write-off method and the allowance...

Quiz 4: Payment for Goods and Services: Cash and Accounts Receivable

KayCo began business January 1,2012.During 2012,sales were $650,000.The year-end accounts receivable balance was $104,000.The company estimates that 10% of accounts receivable will be uncollectible.The financial statements for the year ended December 31,2012 will show ________.

Rusk,Inc.had the following balances at December 31,2012,before recording any adjustments: Rusk estimated that $3,000 of the receivables would be uncollectible.The financial statements for the year ended December 31,2012 will show:

Midway Company had a balance of $(500) in its allowance for uncollectible accounts.Aging of its accounts receivable revealed that the allowance should be $(1,400) .The amount of bad debts expense for the period should be ________.

Lee's Lions had a balance of a positive $200 in its Allowance for uncollectible accounts.Based on an aging of accounts receivable,management estimates that the Allowance for uncollectible accounts balance should be $(2,000) .Bad debts expense should be ________.

KayCo began business January 1,2012.During 2012,sales were $650,000.The year-end accounts receivable balance was $104,000.The company estimates that 1.5% of sales will become bad debts.The financial statements for the year ended December 31,2012 will show ________.

Which accounting principle requires that bad debts expense be recognized in the same period as the sale?

The Allowance for uncollectible accounts ________.

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments: The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,bad debts expense for the year will be:

XYZ Company's accounting records on January 1 showed: On January 2,XYZ wrote off an account receivable of $1,000 from Bounder,Inc.As a result of this write-off,the net realizable value of XYZ's accounts receivable will ________.

The bookkeeper was unable to reconcile the company's checking account,so she changed the company's books to agree with the cash balance on the bank statement.This is an internal control ________.

The sales method for estimating bad debts is calculated using ________.

A company has an allowance for uncollectible accounts of $1,000,a positive number,at the end of the year,before the adjusting entry is made to record this year's bad debts expense.The allowance account has a positive balance because ________.

Team Shirts had a balance in its allowance for uncollectible accounts of $(200) .Aging the accounts receivable showed that the allowance should be $(1,800) .Bad debts expense should be ________.

Team Shirts had a balance of $(700) in its Allowance for uncollectible accounts.Aging of its accounts receivable revealed that the allowance should be $(1,250) .The amount of bad debts expense for the period should be ________.

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments: The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,the allowance for uncollectible accounts will be:

Z Company obtained the following balances from its computerized accounting information system at the end of the year before adjustments: The company estimates that 2% of net sales will be uncollectible.After the correct adjusting entry has been made,bad debts expense for the year will be:

The direct write-off method and the allowance method are methods used to adjust the balance in accounts receivable to reflect uncollectible accounts.