Homework Answers
1. TRUE
The direct write off method is very simple to apply. No estimation of bad or doubtful debts is required in direct write off method. There is a direct charge against the income when the debts actually become bad or irrecoverable, Also, there is no need to open a separate allowance for doubtful accounts in case of direct write off method.
2. FALSE
Direct write off method cannot be manipulated by management because in case of direct write off method debts are written off only when the debts actually become irrecoverable. So there can be no manipulation.
3. TRUE
As per matching concept, expenses incurred to produce particular revenues should be matched with those revenue.
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Question 11 (4 points) The direct write-off method has one advantage-it is very simple to apply....
Question 12 (4 points) The direct write-off method of determining bad debt expense is subjective and...
Question 12 (4 points) The direct write-off method of determining bad debt expense is subjective and can be manipulated by management. True False
Question 6 (4 points) When an account has been written off under the direct write-off method...
Question 6 (4 points) When an account has been written off under the direct write-off method in one period and is collected in a subsequent period, the credit to reinstate the account is made to O Accounts Receivable. Bad Debt Expense. Bad Debt Income. Uncollectible Accounts Recovered. Question 8 (4 points) If after taking a percentage of sales on account, it is estimated that $1,000 will not be collected and the allowance account has an existing credit balance of $200,...
When is it acceptable to use the direct write-off method to account for uncollectible accounts? O...
When is it acceptable to use the direct write-off method to account for uncollectible accounts? O When the expected bad debts are not significant O When the company pledges its accounts receivables O When the expected bad debts are significant O It is never acceptable to use the direct write-off method under GAAP O When the company sells its accounts receivables The advantage of FIFO is that it assigns the most recent costs to cost of goods sold, and better...
Which one of the following is not an accurate statement regarding the direct write-off method of...
Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts? a. The allowance method for bad debts violates the matching principle, but the direct write-off method does not. b. Under the direct write-off method, an expense is increased c. The direct write-off method ignores the possibility that partial collection of a company's outstanding accounts receivable may occur d. The direct write off method has some deficiencies when accounting for bad...
Indicate whether the following are TRUE or FALSE. . The matching principle permits the use of the direct write-off...
Indicate whether the following are TRUE or FALSE. . The matching principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income. _____ Deferred income is an example of a revenue account that increases equity. _____. A credit memo on a bank statement is an example of a timing difference. _____. Federal laws prohibit the selling...
Exercise 9-4 Direct write-off method LO P1 Dexter Company uses the direct write-off method. March 11...
Exercise 9-4 Direct write-off method LO P1 Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $9,109 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions View transaction list Journal entry worksheet 23 Record write off of Leer Co. account. Note: Enter debits before credits Date General Journal...
Question 22 (10 points) This company uses the Direct Write Off Method for accounting for bad...
Question 22 (10 points) This company uses the Direct Write Off Method for accounting for bad debts: Prepare the following entries. Jan. 2nd - Wrote off $6,100 owed by Jim Jones who has filed bankruptcy May 7th - Wrote off $2,000 owed by Jane Lewis who has not made a payment in over a year Nov 3rd - Reinstated the account of Jane Lewis which was written off May. 7th and received $2,000 full payment Dec 5th - Received $700...
QUESTION 11 Two methods of estimating uncollectible receivables are O the direct write-off method and the percent...
QUESTION 11 Two methods of estimating uncollectible receivables are O the direct write-off method and the percent-of-completion method O the gross-up method and the direct write-off method O the aging-of-accounts-receivable method and the percent-of-sales me O the allowance method and the amortization method
QS 7-4 Distinguishing between allowance method and direct write-off method LO P1, P2 Indicate whether each...
QS 7-4 Distinguishing between allowance method and direct write-off method LO P1, P2 Indicate whether each statement best describes the allowance method or the direct write-off method. List Method 1. Estimates bad debts expense related to the sales recorded in that period. 2. Matches the estimated loss from uncollectible accounts receivable against the sales they helped create. Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which usually occurs...
Kimmel, Accounting, 6e TIMER Multiple Choice Question 123 The direct write-off method of accounting for bad...
Kimmel, Accounting, 6e TIMER Multiple Choice Question 123 The direct write-off method of accounting for bad debts O is the preferred method under generally accepted accounting principles O uses an allowance account. O uses a contra asset account. O does not require estimates of bad debt losses. Click if you would like to Show Work for this question: Oren Show Work Question O Type here to search 2 3 5 6 8 0
Question 12 (4 points) The direct write-off method of determining bad debt expense is subjective and can be manipulated by management. True False
Question 6 (4 points) When an account has been written off under the direct write-off method in one period and is collected in a subsequent period, the credit to reinstate the account is made to O Accounts Receivable. Bad Debt Expense. Bad Debt Income. Uncollectible Accounts Recovered. Question 8 (4 points) If after taking a percentage of sales on account, it is estimated that $1,000 will not be collected and the allowance account has an existing credit balance of $200,...
When is it acceptable to use the direct write-off method to account for uncollectible accounts? O When the expected bad debts are not significant O When the company pledges its accounts receivables O When the expected bad debts are significant O It is never acceptable to use the direct write-off method under GAAP O When the company sells its accounts receivables The advantage of FIFO is that it assigns the most recent costs to cost of goods sold, and better...
Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts? a. The allowance method for bad debts violates the matching principle, but the direct write-off method does not. b. Under the direct write-off method, an expense is increased c. The direct write-off method ignores the possibility that partial collection of a company's outstanding accounts receivable may occur d. The direct write off method has some deficiencies when accounting for bad...
Exercise 9-4 Direct write-off method LO P1 Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $9,109 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions View transaction list Journal entry worksheet 23 Record write off of Leer Co. account. Note: Enter debits before credits Date General Journal...
Question 22 (10 points) This company uses the Direct Write Off Method for accounting for bad debts: Prepare the following entries. Jan. 2nd - Wrote off $6,100 owed by Jim Jones who has filed bankruptcy May 7th - Wrote off $2,000 owed by Jane Lewis who has not made a payment in over a year Nov 3rd - Reinstated the account of Jane Lewis which was written off May. 7th and received $2,000 full payment Dec 5th - Received $700...
QUESTION 11 Two methods of estimating uncollectible receivables are O the direct write-off method and the percent-of-completion method O the gross-up method and the direct write-off method O the aging-of-accounts-receivable method and the percent-of-sales me O the allowance method and the amortization method
QS 7-4 Distinguishing between allowance method and direct write-off method LO P1, P2 Indicate whether each statement best describes the allowance method or the direct write-off method. List Method 1. Estimates bad debts expense related to the sales recorded in that period. 2. Matches the estimated loss from uncollectible accounts receivable against the sales they helped create. Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which usually occurs...
Kimmel, Accounting, 6e TIMER Multiple Choice Question 123 The direct write-off method of accounting for bad debts O is the preferred method under generally accepted accounting principles O uses an allowance account. O uses a contra asset account. O does not require estimates of bad debt losses. Click if you would like to Show Work for this question: Oren Show Work Question O Type here to search 2 3 5 6 8 0
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