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WorksheetsTOPIC 7 ACCOUNTING FOR RECEIVABLES
Total questions: 10
Worksheet time: 5mins
When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when
a sale is made.
an account becomes bad and is written off.
management estimates the amount of uncollectibles.
a customer's account becomes past-due.
When an account becomes uncollectible and must be written off,
Bad Debt Expense should be credited.
Allowance for Doubtful Accounts should be credited.
Sales Revenue should be debited.
Accounts Receivable should be credited.
Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited
when a credit sale is past due.
when an account is determined to be uncollectible.
at the end of each accounting period.
whenever a pre-determined amount of credit sales have been made.
Two methods of accounting for uncollectible accounts are the
allowance method and the accrual method.
direct write-off method and the accrual method.
direct write-off method and the allowance method.
allowance method and the net realizable method.
To record estimated uncollectible accounts using the allowance method, the adjusting entry would be a
debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts.
debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
debit to Loss on Credit Sales Revenue and a credit to Accounts Receivable.
Two bases for estimating uncollectible accounts are:
percentage of current assets and percentage of sales.
percentage of assets and percentage of sales.
percentage of receivables and percentage of sales.
percentage of receivables and percentage of total revenue.
Valli Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $700,000 and credit sales are $2,500,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Valli Company make to record the bad debts expense?
Bad Debt Expense 32,000
Allowance for Doubtful Accounts 32,000
Bad Debt Expense 25,000
Accounts Receivable 25,000
Bad Debt Expense 25,000
Allowance for Doubtful Accounts 25,000
Bad Debt Expense 32,000
Accounts Receivable 32,000
Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $12,000. If the balance of the Allowance for Doubtful Accounts is $2,500 credit before adjustment, what is the amount of bad debt expense for that period?
$2,500
$9,500
$12,000
$14,500
Using the percentage-of-receivables basis, the uncollectible accounts is estimated to be $33,000. If the balance for the Allowance for Doubtful Accounts is a $5,000 debit before adjustment, what is the amount of bad debt expense for the period?
$5,000
$28,000
$33,000
$38,000
The direct write-off method of accounting for bad debts
uses an allowance account.
uses a contra-asset account.
does not require estimates of bad debt losses.
is the preferred method under generally accepted accounting principles.
