Barnes Corporation uses the percent of receivables method of accounting for uncollectible accounts. As of December 31, 2013, prior to estimating uncollectible accounts expense, Barnes's balance of accounts receivable was $68,900, the balance of allowance for doubtful accounts was $2,500, and total credit sales for 2013 were $875,000. On December 31, Barnes aged its receivables and determined the following: Indicate whether each of the following statements is true or false.
_____ a) Barnes will report Net Realizable Value of Accounts Receivable equal to $63,170 on its December 31, 2013 balance sheet.
_____ b) Barnes will report Uncollectible Accounts Expense of $5,730 on its 2013 income statement.
_____ c) The December 31 adjusting entry related to uncollectible accounts will decrease assets and equity by $3,230.
_____ d) The method Barnes uses to account for uncollectible accounts is known as the balance sheet approach.
_____ e) Write-offs of uncollectible accounts in 2014 will reduce Barnes' net realizable value of receivables.

Question

Barnes Corporation uses the percent of receivables method of accounting for uncollectible accounts. As of December 31, 2013, prior to estimating uncollectible accounts expense, Barnes's balance of accounts receivable was $68,900, the balance of allowance for doubtful accounts was $2,500, and total credit sales for 2013 were $875,000. On December 31, Barnes aged its receivables and determined the following:  Indicate whether each of the following statements is true or false.
_____ a) Barnes will report Net Realizable Value of Accounts Receivable equal to $63,170 on its December 31, 2013 balance sheet.
_____ b) Barnes will report Uncollectible Accounts Expense of $5,730 on its 2013 income statement.
_____ c) The December 31 adjusting entry related to uncollectible accounts will decrease assets and equity by $3,230.
_____ d) The method Barnes uses to account for uncollectible accounts is known as the balance sheet approach.
_____ e) Write-offs of uncollectible accounts in 2014 will reduce Barnes' net realizable value of receivables.

Quizplus · Accepted Answer

The Answer of Barnes Corporation uses the percent of receivables method of accounting for uncollectible accounts. As of December 31, 2013, prior to estimating uncollectible accounts expense, Barnes's balance of accounts receivable was $68,900, the balance of allowance for doubtful accounts was $2,500, and total credit sales for 2013 were $875,000. On December 31, Barnes aged its receivables and determined the following:  Indicate whether each of the following statements is true or false.
_____ a) Barnes will report Net Realizable Value of Accounts Receivable equal to $63,170 on its December 31, 2013 balance sheet.
_____ b) Barnes will report Uncollectible Accounts Expense of $5,730 on its 2013 income statement.
_____ c) The December 31 adjusting entry related to uncollectible accounts will decrease assets and equity by $3,230.
_____ d) The method Barnes uses to account for uncollectible accounts is known as the balance sheet approach.
_____ e) Write-offs of uncollectible accounts in 2014 will reduce Barnes' net realizable value of receivables.

Barnes Corporation Uses the Percent of Receivables Method of Accounting