WorksheetsACCOUNTING FOR ACCOUNTS RECEIVABLE
Total questions: 25
Worksheet time: 13mins
The journal entry for recording accounts receivable is:
Dr. Sales; Cr. Accounts Receivable
Dr. Accounts Receivable: Cr. Sales
Dr. Cash; Cr. Sales
Dr. Sales; Cr. Accounts Payable
The payment terms 2/10, n/30 tell us that:
a 10% discount will be awarded if the payment is made within 2 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date.
a 2% discount will be awarded if the payment is made within 10 months of invoice date; otherwise, the full amount is payable within 30 months of invoice date.
a 2% discount will be awarded if the payment is made within 10 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date.
a 0.5% discount will be awarded if the payment is made within 10 days of invoice date; otherwise, the full amount is payable within 30 days of invoice date.
The cash discount (also known as purchase discount or sale discount) is given to customers for:
early payments
bulk purchase
frequent purchases
good business relations
The accounts receivable that cannot be collected because of their bankruptcy or another reason are termed as:
collectible accounts
bad customers
doubtful accounts
uncollectible accounts
Under allowance method, the journal entry to record uncollectible accounts expense is:
Allowance for Doubtful Debt Accounts Dr. & Bad Debts Accounts Cr.
Bad Debts Accounts Dr. & Allowance for Doubtful Debt Accounts Cr.
Bad Debts Accounts Dr. & Accounts Receivable Cr.
Accounts Receivable Dr. & Bad Debts Accounts Cr.
The Fortune Company uses allowance method to recognize uncollectible accounts expense. It provides you the following selected information:
Accounts receivable on December 31, 2017: RM380,000 Required balance in Allowance for Doubtful Accounts account on December 31, 2017: RM3,000 Existing balance in Allowance for Doubtful Accounts account on December 31, 2017: RM2,500
The journal entry required to recognize uncollectible accounts expense on December 31, 2017 is:
Bad Debts Expense 500 Dr. & Accounts Receivable 500 Cr.
Bad Debts Expense 2,500 Dr. & Accounts Receivable 2,500 Cr.
Bad Debts Expense 500 Dr. & Allowance for Doubtful Debts Accounts 500 Cr.
Bad Debts Expense 3,000 Dr. & Allowance for Doubtful Debts Accounts 3,000 Cr.
Under allowance method, the journal entry to write off an uncollectible account is:
Allowance for Doubtful Accounts Dr. & Accounts Receivable Cr.
Accounts receivable Dr. & Allowance for Doubtful Accounts Cr.
Bad Debts Expense Dr. & Accounts Receivable Cr.
Accounts Receivable Dr. & Bad Debts Expense Cr.
Under direct write off method, the journal entry to recognize uncollectible accounts expense is:
Accounts receivable Dr.; Sales Cr.
Bad Debts Expense Dr.; Sales Cr.
Bad Debts Expense Dr.; Accounts Receivable Cr.
Accounts Receivable Cr.; Bad Debts Expense Cr.
Under allowance method, the correct journal entry to reinstate a previously written off account is:
Allowance for Doubtful Accounts Dr.; Bad Debts Expense Cr.
Accounts Receivable Dr.; Allowance for Doubtful Accounts Cr.
Allowance for Doubtful Accounts Dr.; Accounts Receivable Cr.
Accounts Receivable Dr.; Sales Cr.
The correct journal entry for collection of accounts receivable is:
Cash Dr.; Accounts Receivable Cr.
Cash Dr.; Sales Cr.
Cash Dr.; Accounts Payable Cr.
Accounts Receivable Dr.; Cash Cr.
When the Allowance for Doubtful Accounts appears on a company's financial statements, its balance will be a __________ balance.
debit
credit
On which financial statement would you expect to find Allowance for Doubtful Accounts?
statement of financial position
statement of comprehensive income
Which method of reporting losses on accounts receivable is to be used for financial reporting?
allowance
direct write-off
After several years of operations, a company's Bad Debts Expense for a given year is likely to be the same as its balance in Allowance for Doubtful Accounts.
True
False
A company estimates that $20,000 of its $500,000 of account receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a credit balance of $8,000. The adjusting entry will include a _____________ to the Allowance for Doubtful Accounts.
debit of $12,000
credit of $12,000
debit of $28,000
credit of$28,000
A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a debit balance of $3,000. The adjusting entry will include a ____________ to Allowance for Doubtful Accounts.
debit of $3000
credit of $3000
debit of $23,000
credit of $23,000
The business provides for doubtful debts each year at 2% of the accounts receivable balance at the end of the financial year. The balance of the Accounts Receivable Control account is $45,000. What is the amount of Allowance for Doubtful Debts?
$900
$9000
$450
$90
Which of the following is not a reason why a business would provide credit?
To increase the amount of sales
To compete with other businesses who are also offering credit
Allows for separation of duties in large business
To enable the use of subsidiary ledgers and control accounts
What effect does bad debts have on debtors?
it increases debtors
it decreases debtors
it has no effect on debtors
none of the above
The double entries to record an increase in allowance for bad debts are?
dr. Accounts Receivables, cr. Allowance for doubtful debts
dr. Bad debt, cr. Allowance for doubtful debts
dr. Allowance for bad debt, cr. Accounts Receivables
dr. Allowance for doubtful debts, cr. Bad debt
1 Jan Allowance for doubtful debts RM500
31 Dec Allowance for doubtful debts RM400
How should the decrease in the allowance be treated in the Profit and Loss account?
add RM400 to expenses
add RM500 to expenses
deduct the RM100 increase in allowance from expenses
add the RM100 decrease in allowance to Gross Profit
Accounts Receivables :
2019 : RM2800;
2020 : RM3100
Allowance for doubtful debts :
2019 : RM280
2020: RM310
What is Net Realizable value for Accounts Receivables should appear in the Statement of Financial Position for 2020?
RM2520
RM2790
RM2510
RM3410
Bad debts can be classified as:
a current asset
a current liability
an expense
a revenue
Under the allowance method, writing off an uncollectible account
affects only Statement of Financial Position accounts.
affects both Statement of Financial Position and income statement accounts.
affects only income statement accounts.
is not acceptable practice.
The Allowance for Doubtful Debts Accounts is increased by a debit.
TRUE
FALSE
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