SI - Chapter 7

Front

How does the year-end adjustment to recognize uncollectible accounts expense affect the elements of the financial statements?

Back

Decrease total assets and decrease stockholders’ equity.

Front

What is the net realizable value of accounts receivable immediately after writing off a $710 uncollectible account from an initial balance of $24,200 in Accounts Receivable and $2,500 in Allowance for Doubtful Accounts?

Back

$24,200 - $710 - $2,500 = $21,990

Front

What is the amount of uncollectible accounts expense recognized on the Year 2 income statement for Grande Company, given the following details: On January 1, Year 2, there was a $14,000 balance in Accounts Receivable and a zero balance in Allowance for Doubtful Accounts. During Year 2, $64,000 of service was provided on account, and $60,500 cash was collected from accounts receivable. Uncollectible accounts are estimated to be 2% of sales on account?

Back

$1,280

Front

What is the amount of cash inflow from customers that would appear in the operating activities section of the cash flow statement if the balance in Accounts Receivable at the beginning of the year was $16,000, $64,000 of credit sales were made, the ending balance in Accounts Receivable was $10,000, and uncollectible accounts expense was $4,000?

Back

$70,000

Front

Why is the amount of cash collected from customers important for financial reporting, and where is it shown in the cash flow statement?

Back

It reflects the company’s ability to convert accounts receivable into cash and is shown in the operating activities section of the cash flow statement.

Front

Some businesses refer to uncollectible accounts as __.

Back

bad debts

Front

Canceling the balance of a customer account because the customer does not pay.

Back

writing off an account

Front

Define: Uncollectible Accounts

Back

Accounts no longer collectible