ACC101_Chapter 9 (A/R Bad debts & Notes receivable)

The Allowance for Doubtful Accounts is

• Asset account

• Contra-asset account

• Revenue account

The Allowance for Doubtful Accounts appears on:

• Balance sheet

• Income statement

• Statement of owner's equity

Accounts receivable: $120,000

Allowance for doubtful accounts: $20,000

=> Net Accounts receivable = ?

• $120,000

• $20,000

• $100,000

The Bad debts expense is

• Asset account

• Contra-asset account

• Revenue account

• Expense account

Direct write off method:

One customer, who previously purchased merchandise on credit, are later not able to pay the accounts receivable of $10,000. Choose the correct journal entry to write off:

• Debit Bad debts expense $10,000

  Credit Allowance For Doubtful Accounts $10,000

• Debit Bad Debts Expense $10,000

  Credit Accounts Receivable $10,000

• Debit Bad Debts Expense $10,000

  Credit Sales revenue $10,000

• Debit Accounts receivable $10,000

  Credit Sales revenue $10,000

Under allowance method, what is the journal entry to record the estimation of bad debts expense at year-end?

• Debit Allowance For Doubtful Accounts

  Credit Accounts Receivable

• Debit Bad Debts Expense

  Credit Allowance For Doubtful Accounts

• Debit Bad Debts Expense

  Credit Accounts receivable

• Debit Cash

  Credit Accounts receivable

Under allowance method, what is the journal entry to write off the account receivable of $1,800 that are found to be uncollectible?

• Debit Allowance For Doubtful Accounts $1,800

  Credit Accounts Receivable $1,800

• Debit Bad Debts Expense $1,800

  Credit Accounts Receivable $1,800

• Debit Bad Debts Expense $1,800

  Credit Allowance For Doubtful Accounts $1,800

• Debit Cash $1,800

  Credit Accounts Receivable $1,800

A company estimates that 4% of its $500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts now has a credit balance of $8,000 before adjusting.

The bad debts expense equal:

• $20,000

• $12,000

• $28,000

• $8,000

The method of estimating bad debts expense that groups a company's accounts receivable into (i) not yet due, (ii) 1-30 days past due and (iii) 31-60 days past due is known as:

• Percent of accounts receivables

• Aging of accounts receivables

• Percent of credit sales

Using aging A/R, a company estimates that $20,000 of its accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a debit balance of $3,000 before adjusting.

The Bad debts expense is:

• $17,000

• $20,000

• $23,000

• $3,000