Q&A Hero

Q: The Corning Company uses the percent of sales method of accounting for uncollectible accounts receivable. At the beginning of the current year, the Allowance for Doubtful Accounts had normal balance of $8,000. The following transactions took place during the current year: Sept. 7 Corning Company determined that the $10,600 account receivable of the Helena Company was uncollectible and wrote it off. Nov. 9 Helena Company paid $6,000 of the amount owed to the Corning Company. Corning Company does not expect further collections from the Helena Company. Dec. 31 Corning Company estimates that 0.5% of its $1,900,000 of credit sales would be uncollectible. Required: Part a. Prepare journal entries to record these transactions. Part b. Determine the balance of the Allowance for Doubtful Accounts at the end of the current year. Assume that the transactions above are the only transactions affecting this account during the year.

Q: When the direct write-off method is used: A) the estimated amount of bad debts is debited to Bad Debt Expense. B) the estimated amount of bad debts is debited to Allowance for Doubtful Accounts. C) the estimated amount of bad debts is debited to which account Accounts Receivable. D) bad debts are not estimated.

Q: Under the direct write-off method, the entry to write off a customers account would include a debit to: A) Bad Debt Expense and a credit to Allowance for Doubtful Accounts. B) Bad Debt Expense and a credit to Accounts Receivable. C) Write-off Expense and a credit to Accounts Receivable. D) Sales and a credit to Accounts Receivable.

Q: When the direct write-off method is used, the entry to write-off a specific account would: A) increase net income. B) have no effect on net income. C) increase Accounts Receivable and increase net income. D) decrease Accounts Receivable and decrease net income.

Q: The direct write-off method: A) results in better matching of costs with revenues than the allowance method. B) is an acceptable method under generally accepted accounting principles (GAAP). C) requires that losses from bad debts be recorded in the period in which sales are made. D) does not report accounts receivable on the balance sheet at their net realizable value.

Q: When the direct write-off method is used to account for uncollectible accounts, which of the following accounts would not be used? A) Bad Debt Expense B) Accounts Receivable C) Allowance for Doubtful Accounts D) Notes Receivable

Q: A company uses the direct write-off method. The company writes off a $3,000 customer account balance when it becomes clear that the particular customer will never pay. What is the journal entry that would be prepared to record this write-off? A) Debit Bad Debt Expense and credit Accounts Receivable for $3,000 B) Debit Allowance for Doubtful Accounts and credit Bad Debt Expense for $3,000 C) Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $3,000 D) Debit Accounts Receivable and credit Bad Debt Expense for $3,000

Q: The direct write-off method for uncollectible accounts is required: A) by the IRS. B) by GAAP C) by IFRS. D) for external financial reporting.

Q: PayPal and national credit card companies charge a fee for their services. How do sellers report these transaction fees on their financial statements? A) In current assets on the balance sheet B) As a deduction from net sales revenue on the income statement C) As selling expenses on the income statement D) As cost of goods sold on the income statement

Q: PayPal and national credit card companies charge Abbigail Company a 3% fee for their services. Abbigail Companys net sales revenue was $10,000 on the last weekend of November. How much cash will be deposited into Abbigails bank account as a result of these sales? A) $30 B) $9,700 C) $10,000 D) $10,030

Q: A company decides to start allowing its customers to pay with national credit cards and PayPal. This decision would: A) slow down its cash collection. B) speeds up its cash collection, but increase losses from customers writing bad checks. C) speeds up its cash collection and reduce losses from customers writing bad checks. D) slow down its cash collection, but decrease losses from customers writing bad checks

Q: Receivables might be sold (factored) to: A) lengthen the time to collect from customers. B) reduce the receivables turnover ratio. C) generate cash immediately. D) generate a gain on sale.

Q: A companys number of days to collect is higher than the length of credit period. Analysts might conclude: A) customers are dissatisfied with the product or service they bought. B) the company is effectively managing its receivables. C) the companys payment terms have been relaxed and customers are taking advantage of those new terms. D) the companys payment terms have been tightened and customers are paying within the payment period granted.

Q: Companies A and B both report net income growth of 12% per year. Company A has a receivables turnover ratio of 5.6, which is lower last year. Company B has a receivables turnover ratio of 11.3, which is higher than last year. All other things being equal: A) Company A is more effectively managing its receivables. B) Company B is more effectively managing its receivables. C) Company As days to collect is lower than Company Bs in both years. D) Company B's days to collect increased.

Q: Which of the following statements about receivables turnover analysis is correct? A) The receivables turnover ratio indicates how many times, on average, the process of selling to and collecting from customers occurs during the accounting period. B) Companies of similar size in different industries tend to have similar receivables turnover ratios. C) A high turnover ratio may suggest the company is allowing too much time for customers to pay. D) The days to collect ratio is found by dividing the receivables turnover ratio by 365 days.

Q: Which of the following statements about the interpretation of the receivables turnover ratio is not correct? A) Analysts often interpret a sudden increase in the receivables turnover ratio as a signal of a developing problem. B) The smaller the receivables turnover ratio the larger the days to collect will be. C) A change in the receivables turnover ratio may indicate a change in the companys credit granting policies. D) A change in the receivables turnover ratio may indicate a change in economic conditions.

Q: Toque Inc. uses the allowance method for bad debts. If management is overly optimistic about its ability to collect customer accounts, the company will understate Bad Debt Expense and: A) overstate net income and days to collect will decline. B) overstate net income but days to collect will increase. C) understate net income and days to collect will increase. D) understate net income and days to collect will decline.

Q: Momentum Products Inc. just recorded an adjusting journal entry for the current years estimate of bad debts. Assuming all else is equal, this adjusting journal entry will cause: A) the accounts receivable turnover ratio to increase. B) net income to increase. C) total assets to remain unchanged. D) net accounts receivable to increase.

Q: Katy Company uses the allowance method. Katy writes off a customer account balance when it becomes clear that the particular customer will never pay. How will this write-off affect the companys net income and accounts receivable turnover ratio? A) Net income and the account receivable turnover ratio will both decrease. B) Net income will decrease; the account receivable turnover ratio will not change. C) Net income will not change; the account receivable turnover ratio will decrease. D) Net income will not change; the account receivable turnover ratio will not change.

Q: Bolster Soda had an accounts receivable turnover ratio of 9.9 this year and 11.0 last year. Castor Soda had a turnover ratio of 9.3 this year and 9.3 last year. This implies: A) Castors receivables turnover ratios were better than Bolsters for both years. B) Bolsters receivables turnover ratios were better than Castors for both years. C) Castor has credit policies that need to be tightened. D) Castor collected receivables more quickly than Bolster in both years.

Q: All other things being equal, a company is better off when its receivable turnover ratio: A) and its days-to-collect measure are both low. B) is high and its days-to-collect measure is low. C) and its days-to-collect measure are both high. D) is low and its days-to-collect measure is high.

Q: Which of the following statements about the receivables turnover analysis is correct? A) Accounts receivable decline as companies sell on credit. B) Accounts receivable increase as companies receive payment. C) Receivables turnover refers to how fast receivables are collected. D) The days to collect will increase as the receivables turnover increases.

Q: The Perry Company reported Accounts Receivable, Net of $66,600 at the beginning of the year and $72,600 at the end of the year If the company's net sales revenue during the fourth year was $876,000, what are the days to collect during year? (Round all calculations to one decimal place.) A) 12.6 B) 29.0 C) 8.0 D) 34.0

Q: The days to collect receivables increased from 32 last year to 48 this year. Which of the following statements is correct? A) The company is likely to see its Bad Debt Expense decrease. B) The company is becoming more efficient at collecting payment. C) The receivables turnover rate must have increased from last year to this year. D) The receivables turnover rate decreased from approximately 11.4 to 7.6 from last year to this year.

Q: The following information is available: Net accounts receivable, December 31, 2015 $ 394,200 Net accounts receivable, December 31, 2016 435,900 Net credit sales for 2015 3,521,400 Net credit sales for 2016 3,795,300 The days to collect for 2016 is closest to: A) 40 days. B) 41 days. C) 43 days. D) 42 days.

Q: The days-to-collect measures the: A) number of days it takes to collect accounts receivable. B) average number of times the firm completes the selling and collecting cycle during the year. C) average number of days for a customer's payment to clear the banking system. D) average number of days before the company receives a customer's payment and uses the cash to re-order merchandise.

Q: A company reported a receivables turnover ratio of 8.0. Cost of goods sold was $350,000 and net sales revenue was $480,000. The average net receivables must have been A) $45,000 B) $120,000 C) $60,000 D) $90,000

Q: Countryside Corporations receivables turnover ratio decreased from 14.1 last year to 11.8 this year. Which of the following statements is correct? A) This indicates that the company is taking longer to collect credit payments. B) This is an indication that the company is experiencing declining credit costs. C) This could be an indication that the company is using more efficient collection methods. D) This is an indication that the company is buying and selling financial assets less rapidly.

Q: A high accounts receivable turnover ratio indicates: A) the company's sales are increasing. B) a large proportion of the company's sales are on credit. C) customers are making payments very quickly. D) the company is taking longer to sell inventory.

Q: The following information is available: Net accounts receivable, December 31, 2015 $ 394,200 Net accounts receivable, December 31, 2016 435,900 Net credit sales for 2015 3,521,400 Net credit sales for 2016 3,795,300 The receivables turnover ratio for 2016 is closest to: A) 8.93 times B) 8.48 times C) 8.71 times D) 9.14 times

Q: The Treadwell Tire Company had net accounts receivable of $67,900 at the beginning of the year and $72,400 at the end of the year. If the company's net sales revenue during the year was $876,875, what is the receivables turnover ratio? A) 12.5 B) 29.2 C) 0.08 D) 0.034

Q: Your company has net sales of $468,300 and average net receivables of $111,500 for the year. Which of the following statements is correct? (Round all calculations to one decimal place.) A) The receivables turnover ratio is 4.2 and the days-to-collect is 0.01. B) The receivables turnover ratio is 0.2 and the days-to-collect is 1,520. C) The receivables turnover ratio is 4.2 and the days-to-collect is 86.9. D) The receivables turnover ratio is 0.2 and the days-to-collect is 87.6.

Q: The receivables turnover ratio: A) is calculated as the average number of days from the time a sale is made on account to the time cash is collected. B) is calculated as the average number of days from the time a sale is made on account to the time payment is due. C) measures how many times a year receivables go uncollected. D) measures how many times, on average, the process of selling and collecting is repeated during the period.

Q: On the maturity date of a $5,000, 3-month, 10% note, the borrower sends a check that includes the principal and all of the interest due on the note. What is the amount of the borrowers check? A) $5,125 B) $5,500 C) $6,500 D) $5,000

Q: Your company converted an existing account receivable in the amount of $5,000 to a note receivable to allow an extended payment period. The note is due in one year and includes an annual interest rate of 5%, The customer repays the principal at the maturity date. The entry to record the receipt of the principal includes a debit to: A) Cash and credit to Notes Receivable. B) Notes Receivable and credit to Accounts Receivable. C) Cash and credit to Interest Receivable. D) Notes Receivable and credit to Cash.

Q: On December 1, 2015, a company converted an existing account receivable in the amount of $6,000 to a note receivable to allow an extended payment period. The note is due in three months and includes an annual interest rate of 9%, The company prepares year-end financial statements on December 31 and recorded adjusting entries at that time. What entry should the company make on March 1, 2016, when the interest is paid at maturity? A) Debit Cash and credit Notes Receivable for $6,135 B) Debit Cash for $6,135, credit Notes Receivable for $6,000, and credit Interest Revenue for $135 C) Debit Cash for $135, credit Interest Receivable for $45, and credit Interest revenue for $90 D) Debit Cash for $135, credit Interest Receivable for $45, and credit Interest Revenue for $90

Q: On December 31, 2015, Infinity Inc. records an adjusting entry to accrue interest on a note. On January 31, 2016, Infinity receives a check for $4,680, which represents two months of accumulated interest on the note. Upon receipt of this interest payment, Infinity should debit: A) Interest Receivable for $2,340, debit Cash $2,340, and credit Interest Revenue for $4,680. B) Cash for $4,680, credit Interest Receivable for $2,340, and credit Interest Revenue for $2,340. C) Cash for $4,680 and credit Interest Receivable for $4,680. D) Cash for $4,680 and credit Interest Revenue for $4,680.

Q: On January 1, a company lends a customer $90,000 for one year at a 7% annual interest rate. The note requires the payment of interest twice each year on June 30 and December 31. An adjusting entry to accrue interest is recorded at the end of every month. On July 2, a check for the interest payment for January through June comes in the mail. What journal entry will the company record on July 2? A) Debit Interest Receivable for $3,150 and credit Interest Revenue for $3,150 B) Debit Cash for $3,150 and credit Notes Receivable for $3,150 C) Debit Interest Revenue for $3,150 and credit Cash for $3,150 D) Debit Cash for $3,150 and credit Interest Receivable for $3,150

Q: Interest Receivable: A) is an asset reported on the balance sheet. B) is a temporary account reported on the income statement. C) is a permanent account reported on the income statement. D) represents the amount of interest the company has received on promissory notes.

Q: On December 1, 2015, a company lends a new employee $20,000 to assist with her relocation expenses. The employee signs a 6-month note, with interest of 9%. The company prepares year-end financial statements at December 31. What is the required adjusting entry at December 31 as a result of this note transaction? A) Debit Interest Revenue and credit Interest Receivable for $900 B) Debit Interest Receivable and credit Interest Revenue for $900 C) Debit Interest Revenue and credit Interest Receivable for $150 D) Debit Interest Receivable and credit Interest Revenue for $150

Q: On October 1, a company lends $10,000 to an employee who signs a 9%, 6-month promissory note. The company is preparing its year-end financial statements on December 31. No adjusting entries have been recorded in connection with this note. What adjusting entry should be recorded before the financial statements are prepared? A) Debit Interest Revenue and credit Interest Receivable for $225 B) Debit Interest Receivable and credit Interest Revenue for $450 C) Debit Interest Revenue and credit Interest Receivable for $450 D) Debit Interest Receivable and credit Interest Revenue for $225

Q: Generous Inc. lends Blue Inc. $40,000 on April 1 and receives a four-month, 4.5% interest-bearing note. Generous Inc. prepares financial statements on April 30. What adjusting entry should be made by Generous Inc. before its financial statements are prepared? A) Debit Note Receivable and credit Cash for $40,000 B) Debit Interest Receivable and credit Interest Revenue for $150 C) Debit Cash and credit Interest Revenue for $150 D) Debit Interest Receivable and credit Interest Revenue for $600

Q: On March 1, Preston Corporation loans $3,000 to an employee and receives a 5%, three-month note. Interest will be paid when the note matures on May 31. Assuming that interest on the note has not previously been accrued, what entry will Preston make on April 30? A) Debit Interest Revenue and credit Interest Receivable $25 B) Debit Interest Receivable and credit Interest Revenue $25 C) Debit Interest Receivable and credit Interest Revenue $50 D) Debit Cash and credit Interest Revenue for $50

Q: On January 1, a company lends $90,000 to a customer for one year at a 7% annual interest rate. The note requires the payment of interest twice each year on June 30 and December 31. The company records adjusting entries on a monthly basis. At the end of each month in which the company does not receive any interest payments, the company: A) records an entry with a debit to Cash of $525 and a credit to Interest Revenue of $525. B) records an entry with a debit to Notes Receivable of $525 and a credit to Cash of $525. C) records an entry with a debit to Interest Receivable of $525 and a credit to Interest Revenue of $525. D) does not record an adjusting entry, since no transaction has occurred.

Q: Which of the following statements about the recording of interest on notes receivable is correct? A) Interest on notes receivable is recorded as revenue only when the cash is received. B) When a company makes an interest payment on a note, the payment is debited to Interest Receivable. C) Interest on notes receivable is recognized when it is earned, which is not necessarily when the interest is received in cash. D) Interest earned but not yet received must be recorded in an adjusting entry which includes a debit to Interest Revenue.

Q: On July 1, 2016, Empire Inc. lends $8,000 to a customer and receives a 9% note due in two years. Interest is due in full on July 1, 2018, the due date of the note. What is the amount of Interest Revenue that will be reported on Empires income statement for the year ended December 31, 2016? A) $1,440 B) $720 C) $420 D) $360

Q: A company lends $10,000 to an employee who signs a 9%, 6-month promissory note. What is the total amount of interest on this note? A) $900 B) $450 C) $10,450 D) $2,700

Q: When a company lends cash to a customer who signs a promissory note: A) total assets decrease when the lending transaction occurs, but increase when the amount borrowed by the customer is repaid. B) total assets increase when the lending transaction occurs and revenues increase when the amount borrowed by the customer is repaid. C) total assets increase and liabilities increase when the lending transaction occurs. D) total assets and net income do not change when the lending transaction occurs.

Q: Specialty Inc. converts an existing account receivable to a note receivable to allow an extended payment period. Specialty receives a $2,000, 3-month, 12% promissory note from its customer. What entry will Specialty make upon receipt of the note? A) Debit Notes Receivable and credit Accounts Receivable for $2,060 B) Debit Accounts Receivable and credit Notes Receivable for $2,000 C) Debit Notes Receivable for $2,000, debit Interest Receivable for $60, credit Accounts Receivable for $2,000, and credit Interest Revenue for $60 D) Debit Notes Receivable and credit Accounts Receivable for $2,000

Q: A company lends its supplier $150,000 for 3 years at a 6% annual interest rate. Interest payments are to be made twice a year. The entry to record this lending transaction includes a debit to: A) Notes Receivable and a credit to Cash for $150,000. B) Cash and a credit to Notes Payable for $150,000. C) Cash and a credit to Interest Revenue for $9,000. D) Interest Receivable and a credit to Interest Revenue for $4,500.

Q: A company lent $10,000 to an employee who signed a 9%, 6-month promissory note. The entry made by the company to record this loan to the employee will include a: A) debit to Accounts Receivable for $10,000. B) credit to Sales for $10,000. C) debit to Notes Receivable for $10,000. D) credit to Notes Payable for $10,000.

Q: What is the annual rate of interest being charged on a 9-month note receivable of $50,000 if the total interest is $3,000? A) 6% B) 8% C) 12% D) 10%

Q: A company lends its supplier $150,000 for 3 years at a 6% annual interest rate. Interest payments are to be made twice a year. Each interest payment will be for: A) $9,000 B) $13,500 C) $4,500 D) $27,000

Q: On January 1, a company lends a corporate customer $80,000 at 6% interest. The amount of interest revenue that should be recorded for the quarter ending March 31 equals: A) $4,800 B) $1,200 C) $400 D) $1,600

Q: When interest is calculated for periods shorter than a year, the formula to calculate interest is: A) I = P R T, where I = interest calculated, P = principal, R = annual interest rate, and T = number of months. B) I = P R T, where I = interest calculated, P = principal, R = annual interest rate, and T = (number of months 12). C) I = P R T, where I = interest calculated, P = principal, R = monthly interest rate, and T = (number of months 12). D) I = (MV P)/T, where I = interest calculated, MV = maturity value, P = principal and T = number of months.

Q: In the interest formula, the interest rate is on a(n) _____ basis; therefore, the time variable must reflect how many _____ out of _____ in the interest period. A) monthly, months, 6 B) annual, years, 1 C) monthly, months, 12 D) annual, months, 12

Q: Company A lends $100,000 to Company B. The interest on the loan is reported as: A) an expense to Company A and a revenue to Company B. B) an asset to Company A and a revenue to Company B. C) a liability to Company A and an asset to Company B. D) a revenue to Company A and an expense to Company B.

Q: The Allowance for Doubtful Accounts: A) is a contra-revenue account. B) has a normal debit balance. C) is not listed on the chart of accounts of a company that uses the direct write-off method. D) is reported on the Income Statement.

Q: The direct write-off method for uncollectible accounts: A) violates the expense recognition principle. B) is an acceptable alternative method of recognizing Bad Debt Expense under GAAP. C) results in higher Bad Debt Expense for most companies. D) may only be used by companies that do not extend credit to their customers.

Q: Which of the following statements about methods of accounting for bad debts is correct? A) When the allowance method is used, the journal entry to write-off an uncollectible account does not change the amount reported as Accounts Receivable, Net on the balance sheet. B) The two methods of accounting for bad debts that are acceptable under GAAP are the allowance method and the direct write-off method. C) When the allowance method is used, Bad Debt Expense is equal to the write-offs that occurred during the period. D) When the allowance method is used, if actual results differ from the estimates, the prior year financial statements must be corrected.

Q: The balance of the Allowance for Doubtful Accounts was $12,656 at the beginning of the year and $14,348 at the end of the year. Bad Debt Expense was $3,879 for the year. Recoveries in the amount of $100 were recorded during the year. Which of the following statements is correct? A) The Allowance for Doubtful Accounts account was retroactively debited for $2,187 to record additional bad debts that became apparent in a future time period. B) The Allowance for Doubtful Accounts account was debited for $2,287 to record write-offs during the year. C) The Allowance for Doubtful Accounts account was credited $2,287 for payments from customer whose account balances were previously written off. D) The Allowance for Doubtful Accounts account was credited $2,187 for the difference between the percent of credit sales method and the aging of accounts receivable method.

Q: The entry to record a recovery causes: A) an increase in net accounts receivable. B) a decrease in net accounts receivable. C) net accounts receivable to stay the same. D) an increase in total revenues.

Q: Carrington Company uses the allowance method for recording bad debts. On February 1, Carrington wrote off a $3,500 customer account balance when it became clear that the particular customer would never pay. On May 29, Carrington unexpectedly received a check for $3,500 from the customer. On May 29, Carrington will: A) Debit Cash and credit Bad Debt Expense for $3,500; debit Accounts Receivable and credit Allowance for Doubtful Accounts for $3,500. B) Debit Allowance for Doubtful Accounts and credit Accounts Receivable for $3,500; debit Cash and credit Bad Debt Expense for $3,500. C) Debit Accounts Receivable and credit Allowance for Doubtful Accounts for $3,500; debit Cash and credit Accounts Receivable for $3,500. D) Debit Allowance for Doubtful Accounts and credit Bad Debt Expense for $3,500; debit Cash and credit Accounts Receivable for $3,500.

Q: On June 12, because management knew with near certainty that it had no chance of collection, Sheave Company wrote off a customers account balance in the amount of $350. On November 3, the customer mailed a payment for $350 to Sheave. To record the receipt of this payment from the customer, the company would debit: A) Bad Debt Expense and credit Cash. B) Accounts Receivable and credit Bad Debt Expense, and then debit Cash and credit Allowance for Doubtful Accounts. C) Cash and credit Accounts Receivable. D) Accounts Receivable and credit Allowance for Doubtful Accounts, and then debit Cash and credit Accounts Receivable.

Q: To ensure that the Allowance for Doubtful Accounts account does not become materially misstated over time, companies revise overestimates of prior periods by: A) recording a retroactive correcting entry. B) lowering estimates in the current period. C) increasing estimates in the current period. D) notifying the users of its financial statements of the error.

Q: A companys unadjusted trial balance at the end of the year includes the following: Accounts Receivable $98,000 Unadjusted debit balance in Allowance for Doubtful Accounts 1,000 The company uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800. What is the amount of Bad Debt Expense to be recorded for the year? A) $5,800 B) $4,800 C) $6,800 D) $7,800

Q: Total doubtful accounts at the end of the year are estimated to be $25,000 based on an aging of accounts receivable. If the balance in the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is current years Bad Debt Expense? A) $7,000 B) $18,000 C) $25,000 D) $32,000

Q: The Allowance for Doubtful Accounts will have a debit balance before adjustments when: A) the company increased its collection efforts. B) the company recovered some accounts previously written off. C) bad debts were underestimated at the end of the prior period. D) bad debts were overestimated at the end of the prior period.

Q: Your company has previously averaged about 26% of its accounts receivable in the "over 90 days past due" category. This year, the company hired a new collections manager and, as a result, management forecasts that only 18% of its accounts receivable will be in this category at the end of the current year. The company uses the aging of accounts receivable method of estimating Bad Debt Expense. If the total of credit sales and year-end balance in accounts receivable remain unchanged from the previous year and no write offs were made during the current year, this years bad expense will: A) increase over the estimate for previous months. B) decrease over the estimate for previous months. C) not change. D) will depend on the percentage of credit sales deemed uncollectible.

Q: Your company uses the again of accounts receivable method. Net credit sales are unchanged from last year, the year-end balance in Accounts Receivable is unchanged from the previous years ending balance, and there were no write-offs during the current year. The company previously averaged about 20% of its total accounts receivable in the "over 90 days past due" category and now has 35% in this category at the end of the current year. The dollar amount of the adjustment to record Bad Debt Expense in the current year: A) decline, thus increasing the ending balance of the Allowance for Doubtful Accounts account. B) increase, thus increasing the ending balance of the Allowance for Doubtful Accounts account. C) decline, thus reducing the ending balance of the Allowance for Doubtful Accounts account. D) increase, thus reducing the ending balance of the Allowance for Doubtful Accounts account.

Q: A company used the aging of accounts receivable method. At December 31, management determined that the net realizable value of accounts receivable was $304,000. The balance in Accounts Receivable was $384,000 and the unadjusted credit balance in Allowance for Doubtful Accounts was $16,000. What was the amount of Bad Debt Expense for the year? A) $96,000 B) $64,000 C) $80,000 D) $16,000

Q: Wechsler Company uses the aging of accounts receivable method. The company performed an aging of accounts receivable on December 31 and gathered the following information: Accounts Receivable $525,000 Unadjusted Credit balance in Allowance for Doubtful Accounts 20,000 Estimated Uncollectible Accounts Receivable 29,000 What is the amount of Accounts Receivable, Net that will be reported on the balance sheet at December 31? A) $505,000 B) $496,000 C) $467,000 D) $516,000

Q: The unadjusted trial balance at the end of the year includes the following: Accounts Receivable $98,000 Allowance for Doubtful Accounts 1,000 Both accounts have normal balances. The company uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800. What is the amount of Bad Debt Expense to be recorded for the year? A) $5,800 B) $4,800 C) $6,800 D) $7,800

Q: As of December 31, Frappe Company has a balance of $5,000 in accounts receivable. Of this amount, $500 is past due and the remainder is not yet due. Frappe has a credit balance of $45 in the Allowance for Doubtful Accounts. Frappe Company estimates its bad debt losses using the aging of receivables method, with estimated bad debt loss rates equal to 1% of accounts not yet due and 10% of past due accounts. How will the Bad Debt Expense account be included in the required adjusting journal entry at year-end? A) Debit of $95 B) Credit of $95 C) Debit of $50 D) Credit of $50

Q: Friedman Company uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $25,000. The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,000. What is the estimated Bad Debt Expense for the period? A) $8,000 B) $17,000 C) $25,000 D) $33,000

Q: Wheeling Inc. uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $5,000. At the end of the year, the balance of Accounts Receivable is $100,000 and the unadjusted debit balance of the Allowance for Doubtful Accounts is $500. Credit sales during the year totaled $150,000. What is the estimated Bad Debt Expense for the current year? A) $4,500 B) $5,000 C) $5,500 D) $7,000

Q: Using the aging method of accounts receivable method, $5,000 of the companys Accounts Receivable are estimated to be uncollectible. At the end of the year, the balance of Accounts Receivable is $100,000 and the unadjusted credit balance of the Allowance for Doubtful Accounts is $500. Credit sales during the year totaled $150,000. What is the current years Bad Debt Expense? A) $4,500 B) $5,000 C) $7,000 D) $7,500

Q: The amount of uncollectible accounts at the end of the year is estimated to be $25,000, using the aging of accounts receivable method. The balance in the Allowance of Doubtful Accounts account is an $8,000 credit before adjustment. What is the adjusted balance of the Allowance for Doubtful Accounts at the end of the year? A) $8,000 B) $17,000 C) $25,000 D) $33,000

Q: Which of the following statements about the Allowance for Doubtful Accounts is correct? A) The Allowance for Doubtful Accounts is credited when a specific write-off is recorded. B) Under the aging of accounts receivable method, Bad Debt Expense is calculated and then added to the beginning balance in the Allowance for Doubtful Accounts. C) The Allowance for Doubtful Accounts is a contra-revenue account. D) The Allowance for Doubtful Accounts has a normal credit balance.

Q: Davidoff Company reported net credit of $735,000 on account for the year ending December 31, 2016. On January 1, 2016, the Allowance for Doubtful Accounts had a credit balance of $18,000. During 2016, $30,000 of uncollectible accounts receivable were written off. Davidoff has experienced bad debt losses of 3% of credit sales in prior periods. Using the percentage of credit sales method, what is the adjusted balance in the Allowance for Doubtful Accounts at December 31, 2016? A) $10,050 B) $10,500 C) $22,050 D) $34,500