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Exam 15: Accounts Receivable and Uncollectible Accounts

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Question 21

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On December 31,2016,prior to adjustments,the Allowance for Doubtful Accounts has a debit balance of $750.An aging of the accounts receivable produces an estimate of $6,500 of probable losses from uncollectible accounts.The balance in the Allowance for Doubtful Accounts after the entry to record estimated losses from uncollectible accounts will be:

A) a credit of $6,500
B) a credit of $5,750
C) a credit of $7,250
D) a debit of $6,500

E) B) and C)
F) None of the above

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Question 22

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A firm reported sales of $600,000 during the year and has a balance of $40,000 in its Accounts Receivable account at year-end.Prior to adjustment,Allowance for Doubtful Accounts has a credit balance of $600.The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales.The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

A) $6,000.
B) $3,600.
C) $3,000.
D) $2,400.

E) C) and D)
F) None of the above

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Question 23

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Which of the following statements is not correct?

On December 31,prior to adjustment,Allowance for Doubtful Accounts has a debit balance of $400.An aging of the accounts receivable produces an estimate of $2,600 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

A procedure that groups accounts receivable according to the length of time they have been outstanding is called ____________________ the accounts receivable.

When an account that was written off is later collected,it takes _____________________ entries to record the transaction (when using the allowance method).

On December 31,prior to adjustments,the balance of Accounts Receivable is $32,000 and Allowance for Doubtful Accounts has a credit balance of $190.The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

Allowance for Doubtful Accounts has a credit balance of $1,100 at the end of the year,before adjustments.Sales for the year amounted to $760,000,sales discounts amounted to $12,000 and sales returns and allowances amounted to $36,000.If the uncollectible accounts expense is estimated at 2% of net sales,the amount of the adjusting entry to record the estimated losses from uncollectible accounts will be

When the allowance method of recognizing losses from uncollectible accounts is used,the net value of accounts receivable on the balance sheet will more nearly reflect the amount that will ultimately be collected.

To achieve good internal control over accounts receivable,it is important to separate the recording of accounts receivable transactions and the collection of cash from customers.

A firm reported net credit sales of $450,000 during the year and has a balance of $40,000 in its Accounts Receivable account at year-end.Prior to adjustments,Allowance for Doubtful Accounts has a debit balance of $200.The firm estimates its losses from uncollectible accounts to be one-half of 1 percent of net credit sales.The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for

The adjusting entry to record estimated losses from uncollectible accounts consists of a debit to Allowance for Doubtful Accounts.

Common internal controls for accounts receivable would not include:

Millie's Draperies uses the allowance method of recording bad debts.On June 13,the $200 account balance of Jane Murphy was charged off.However,on August 5,Murphy paid $80 of the amount previously written off.The entry to record the payment from Murphy would include:

On December 31,prior to adjustment,Allowance for Doubtful Accounts has a debit balance of $800.An aging of the accounts receivable produces an estimate of $5,200 of probable losses from uncollectible accounts.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for

Allowance for Doubtful Accounts may be used for the valuation of all types of receivables.

Nigel Lighting uses the direct charge-off method of recording bad debts.On Sept.4,the $300 account balance of Louis Blue was charged off.However,on November 15,Blue paid $70 of the amount previously written off.The entry to record the payment from Blue would include:

Nigel Lighting uses the direct charge-off method of recording bad debts.On September 4,the company concluded that the $300 account balance of Louis Blue should be charged off.The entry to write off Blue's account will be:

Allowance for Doubtful Accounts is a liability account.

The entry to record the write-off of a specific uncollectible account using the allowance method includes a ____________________ to Allowance for Doubtful Accounts.