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Exam 13: Accounting for Bad Debts

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Question 21

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The adjusting entry for uncollectibles is based on an estimate.

A) True
B) False

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Question 22

Multiple Choice

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Mercury Holdings estimates it will collect $4,200 of the $5,620 owed by customers. The $4,200 is:

A) the Net Realizable Value.
B) the Bad Debts Allowance.
C) the Allowance for Doubtful Accounts.
D) the Gross Accounts Receivable.

E) B) and D)
F) B) and C)

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Question 23

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What general ledger account is debited to write off a customer's account as uncollectible if using the allowance method for uncollectible receivables?

Use the account code numbers to identify how the following transactions would be journalized. [1] Accounts Receivable [2] Allowance for Doubtful Accounts [3] Cash [4] Bad Debts Recovered [5] Bad Debts Expense -Wrote off an account using the direct write off method. Debit account ________ Credit account ________

Determine the amount of the adjustment for bad debts given: Bad debts are estimated to be 6% of receivables

Evaluate the differences of the effect on the financial statements between the income statement approach and the balance sheet approach for estimating bad debts expense on the financial statement presentation.

The aging of Accounts Receivable is a balance sheet approach.

What type of account is an Allowance for Doubtful Accounts?

The Allowance for Doubtful Accounts has a credit balance of $5,000. Net credit sales for the year were $900,000. Four percent is the estimated uncollectible based on net credit sales. Calculate the amount of the adjustment, for the allowance for doubtful accounts, using the income statement approach. Amount of the adjustment ________

The normal balance of the Allowance for Doubtful Accounts account is a debit.

Barry Waterhouse uses the aging of Accounts Receivable balance sheet approach to estimate uncollectibles. Not yet due accounts are $470,000, with an estimated uncollectible percentage of 1.5%. 1-30 days past due accounts are $100,000, with an estimated uncollectible percentage of 3%. Over 30 days past due accounts are $3,900 with an estimated uncollectible percentage of 10%. If the company has a debit balance in Allowance for Doubtful Accounts of $950, what is the bad debts expense adjusting entry amount? (Round any intermediate calculations and your final answer to the nearest dollar.)

Under the balance sheet approach, bad debts expense is $1,000 if the estimated amount of uncollectible accounts is $1,200 and the Allowance for Doubtful Accounts has a credit balance of $200.

Determine the amount of the adjustment for bad debts given: Bad debts are estimated to be 7% of receivables

On December 31, 2019, Balloon Buddies had a balance in Accounts Receivable of $39,000. Net credit sales for the year were $334,000. The Allowance for Doubtful Accounts has a credit balance of $700. Journalize the recording of the bad debts expense under the income statement approach if 2.5% of net credit sales is deemed uncollectible.

Gross Accounts Receivable is $21,000. Allowance for Doubtful Accounts has a credit balance of $600. Net credit sales for the year are $132,000. In the past, 3% of credit sales had proved uncollectible, and an aging of the receivables indicates $1,800 is doubtful. Under the balance sheet approach, Bad Debts Expense for the year is:

Town and Country Saddle learns the account receivable for a customer is uncollectible. The journal entry under the allowance method to write off an account is to:

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature. -

The journal entry to record the estimate of uncollectible accounts includes a:

A detailed analysis of Accounts Receivable to determine how long each account has been outstanding is called:

The Allowance for Doubtful Accounts is adjusted: