Homework Answers
| List | Method | |
| 1. | Estimates bad debts expense related to the sales recorded in that period. | Allowance method |
| 2. | Matches the estimated loss from uncollectible accounts receivable against the sales they helped create. | Allowance method |
| 3. | Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which usually occurs in a period after the credit sale. | Direct write-off method |
| 4. | Bad debts expense is recorded in the period in which the related sales occur. | Allowance method |
| 5. | Bad debts expense is recorded when an account is determined to be uncollectible | Direct write-off method |
| 6. | An adjusting entry is generally required at the end of each period to estimate bad debts. | Allowance method |
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QS 7-4 Distinguishing between allowance method and direct write-off method LO P1, P2 Indicate whether each...
Saved The following list describes aspects of either the allowance method or the direct write-offf method to acco...
Saved The following list describes aspects of either the allowance method or the direct write-offf method to account for bad debts. For each item listed, indicate if the statement best describes either the allowance method or the direct write-off method. List Method 1 May be used when bad debts expense is very small in relation to a company's sales and net income. 2 The write-off of a specific account does affect net income The loss from an uncollectible account receivable...
Required Information Learning Objective 07-P2: Apply the allowance method to accounts receivable. Under the allowance method,...
Required Information Learning Objective 07-P2: Apply the allowance method to accounts receivable. Under the allowance method, bad debts expense is recorded with an adjustment at the end of each accounting period that debits the Bad Debts Expense account and credits the Allowance for Doubtful Accounts. The uncollectible accounts are later written off with a debit to the Allowance for Doubtful Accounts. Knowledge Check 01 The allowance method of accounting for bad debts has the following advantages over the direct write-off...
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,...
. Under the direct write-off method of accounting for uncollectible accounts a. the allowance account is...
. Under the direct write-off method of accounting for uncollectible accounts a. the allowance account is increased for the actual amount of bad debt at the b. a specific account receivable is decreased for the actual amount of bad debt at c. balance sheet relationships are emphasized. time of write-off the time of write-off. d. bad debt expense is always recorded in the period in which the revenue was recorded. Which of the following should not be included in the...
Describe fully both the direct write-off method and the allowance method of recognizing bad debt expense,...
Describe fully both the direct write-off method and the allowance method of recognizing bad debt expense, discuss the reasons why one of the methods is preferable to the other and the reasons why the other method is not usually in accordance with generally accepted accounting principles.
Bad Debt Practice Exercises 26. The percentage of receivables method for estimating uncollectible accounts focuses on...
Bad Debt Practice Exercises 26. The percentage of receivables method for estimating uncollectible accounts focuses on a net realizable value b. the relationship between accounts receivable and bad debts expense c. income statement relationships d. the relationship between sales and accounts receivable 27. Holman Company uses the percentage of credit sales method. Cash sales are $1,000,000 and credit sales are $4,000,000. Management estimates that 1% of sales will be bad. What adjusting entry will Homan Company make to record the...
PRINTE Question 6 Under the allowance method for uncollectible accounts, allowance for doubtful accounts increases,...
PRINTE Question 6 Under the allowance method for uncollectible accounts, allowance for doubtful accounts increases, while accounts receivables decrease when writing off an uncollectible account. O the entry to write off an uncollectible account only involves statement of financial position accounts. bad debt expense increases, while allowance for doubtful accounts decreases when writing off an uncollectible account. bad debts expense is not recorded until a customer defaults.
PRINTER Question 6 Under the allowance method for uncollectible accounts, allowance for doubtful accounts increases, while...
PRINTER Question 6 Under the allowance method for uncollectible accounts, allowance for doubtful accounts increases, while accounts receivables decrease when writing off an uncollectible account. the entry to write off an uncollectible account only involves statement of financial position accounts. bad debt expense increases, while allowance for doubtful accounts decreases when writing off an uncollectible account. KD bad debts expense is not recorded until a customer defaults.
Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods Seaforth International wrote off...
Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer Amount Kim Abel $24,300 Lee Drake 31,195 Jenny Green 29,715 Mike Lamb 17,890 Total $103,100 The company prepared the following aging schedule for its accounts receivable on December 31: Aging Class (Number of Days Past Due) Receivables Balance on December 31 Estimated Percent of Uncollectible Accounts 0-30 days $735,000 1 %...
Exercise 7-10A Accounting for uncollectible accounts: percent of revenue allowance versus direct write-off method LO 7-1,...
Exercise 7-10A Accounting for uncollectible accounts: percent of revenue allowance versus direct write-off method LO 7-1, 7-4 Joey’s Bike Shop sells new and used bicycle parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During Year 1, its first year of operations, Joey’s Bike Shop experienced the following: Sales on account $ 270,400 Cash sales 660,200 Collections of accounts receivable 256,880 Uncollectible accounts charged off during the year 1,292 Required: a....
Saved The following list describes aspects of either the allowance method or the direct write-offf method to account for bad debts. For each item listed, indicate if the statement best describes either the allowance method or the direct write-off method. List Method 1 May be used when bad debts expense is very small in relation to a company's sales and net income. 2 The write-off of a specific account does affect net income The loss from an uncollectible account receivable...
Required Information Learning Objective 07-P2: Apply the allowance method to accounts receivable. Under the allowance method, bad debts expense is recorded with an adjustment at the end of each accounting period that debits the Bad Debts Expense account and credits the Allowance for Doubtful Accounts. The uncollectible accounts are later written off with a debit to the Allowance for Doubtful Accounts. Knowledge Check 01 The allowance method of accounting for bad debts has the following advantages over the direct write-off...
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,...
. Under the direct write-off method of accounting for uncollectible accounts a. the allowance account is increased for the actual amount of bad debt at the b. a specific account receivable is decreased for the actual amount of bad debt at c. balance sheet relationships are emphasized. time of write-off the time of write-off. d. bad debt expense is always recorded in the period in which the revenue was recorded. Which of the following should not be included in the...
Bad Debt Practice Exercises 26. The percentage of receivables method for estimating uncollectible accounts focuses on a net realizable value b. the relationship between accounts receivable and bad debts expense c. income statement relationships d. the relationship between sales and accounts receivable 27. Holman Company uses the percentage of credit sales method. Cash sales are $1,000,000 and credit sales are $4,000,000. Management estimates that 1% of sales will be bad. What adjusting entry will Homan Company make to record the...
PRINTE Question 6 Under the allowance method for uncollectible accounts, allowance for doubtful accounts increases, while accounts receivables decrease when writing off an uncollectible account. O the entry to write off an uncollectible account only involves statement of financial position accounts. bad debt expense increases, while allowance for doubtful accounts decreases when writing off an uncollectible account. bad debts expense is not recorded until a customer defaults.
PRINTER Question 6 Under the allowance method for uncollectible accounts, allowance for doubtful accounts increases, while accounts receivables decrease when writing off an uncollectible account. the entry to write off an uncollectible account only involves statement of financial position accounts. bad debt expense increases, while allowance for doubtful accounts decreases when writing off an uncollectible account. KD bad debts expense is not recorded until a customer defaults.
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