PART A The allowance for credit losses account is classified as Multiple Choice a contra-revenue account....
PART A
The allowance for credit losses account is classified as
Multiple Choice
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a contra-revenue account.
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a contra-equity account.
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a contra-asset account.
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a contra-expense account.
PART B
An analyst notes that ABC Inc.’s allowance for credit losses as a percentage of year-end accounts receivable has changed. Which of the following would not be a plausible explanation for the change?
Multiple Choice
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ABC’s management is using the allowance for credit losses to “manage” earnings.
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The company ages its receivables and the distribution of accounts receivable over the various age categories is different than prior years.
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The company has stopped making sales on credit.
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ABC’s management expects a default rate on outstanding receivables different than prior years.
Homework Answers
PART A
a contra-asset account
PART B
The company ages its receivables and the distribution of accounts receivable over the various age categories is different than prior years
Add Answer to:
PART A
The allowance for credit losses account is classified as
Multiple Choice
a contra-revenue account....
Multiple Choice Question 106 Which of the following accounts is classified as a contra revenue account? Sales R...
Multiple Choice Question 106 Which of the following accounts is classified as a contra revenue account? Sales Returns and Allowances Purchase Discounts Cost of Goods Sold Sales Revenue Multiple Choice Question 107 Sales revenues are usually considered earned when goods have been transferred from the seller to the buyer. adjusting entries are made. cash is received from credit sales. an order is received.
Which of the following is not true about the Allowance for Doubtful Accounts? Multiple Choice It...
Which of the following is not true about the Allowance for Doubtful Accounts? Multiple Choice It is debited when uncollectible accounts are written off. It is credited when bad debts expense is estimated and recorded. It is used instead of reducing accounts receivable directly. It is a contra asset account. It is a liability account.
Multiple Choice questions (1-3) 1 tick for each correct answer. The Bad debt expense account is...
Multiple Choice questions (1-3) 1 tick for each correct answer. The Bad debt expense account is classified as: As part of cost of goods sold. As a contra account. As a cost to the seller for extending credit and report as operating expense. Deducted from accounts receivable account on the Statement of Financial Position. Answer: _____ Apperture Equipment Store uses the % of credit sales method to estimate bad debt expense. Net credit sales for the year amount to RM500,000...
4. Jackson Co. currently has an Allowance for Doubtful Accounts (contra account to accounts receivable) credit...
4. Jackson Co. currently has an Allowance for Doubtful Accounts (contra account to accounts receivable) credit balance of $22,000. The year-end Accounts Receivable balance (gross) is $425,000. Jackson Co. estimates that they should have 3.5% of total year sales in their Allowance for Doubtful Accounts at year-end. Note: Total year sales were $1.3 million. a. Prepare the necessary entry to adjust the Allowance for Doubtful Accounts to the correct balance. b. What is the correct balance for Jackson Co. year-end...
D) $3,360 12. Under the allowance method of accounting for credit losses, the entry to write...
D) $3,360 12. Under the allowance method of accounting for credit losses, the entry to write off a specific account: A) Will increase total assets B) Debits Bad Debts Expense and credits Allowance for Doubtful Accounts C) is the same as the entry to write off a specific account under the direct write-off method D) Does not affect net income or total assets 13. Boulder Beaver Company had a $150.000 beginning balance in Accounts Receivable and a $6,000 credit balance...
Multiple Choice Question 113 Blue Spruce Corp. uses the percentage-of-receivables method for recording bad debt expense....
Multiple Choice Question 113 Blue Spruce Corp. uses the percentage-of-receivables method for recording bad debt expense. The Accounts Receivable balance is $400000 and credit sales are $1600000. Management estimates that 6 % of accounts receivable will be uncollectible. What adjusting entry will Blue Spruce Corp. make if the Allowance for Doubtful Accounts has a credit balance of $4000 before adjustment? Bad Debt Expense 16000 Accounts Receivable 16000 Bad Debt Expense 20000 Allowance for Doubtful Accounts 20000 Bad Debt Expense 8000...
Multiple Choice Question 99 Under the allowance method of accounting for uncollectible accounts, O allowance for...
Multiple Choice Question 99 Under the allowance method of accounting for uncollectible accounts, O allowance for Doubtful Accounts is closed each year to Income Summary. the cash realizable value of accounts receivable is greater before an account is written off than after it is written off. O bad Debt Expense is debited when a specific account is written off as uncollectible. O the cash realizable value of accounts receivable in the balance sheet is the same before and after an...
2 A company had net sales of $520,000, total sales of $670,000, and an average accounts...
2
A company had net sales of $520,000, total sales of $670,000, and an average accounts receivable of $84,000. Its accounts receivable turnover equals: Multiple Choice 0.16 0.13 7.98 O.78 6.19 A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $31,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance...
b. Comment on the use of the one percent rate to provide for credit losses in...
b. Comment on the use of the one percent rate to provide for
credit losses in part a.
Allowance Method Steinbrook Company, which has been in business for three years, makes all of its sales on account and does not offer cash discounts. The firm's credit sales, collections from custom- ers, and write-offs of uncollectible accounts for the three-year period are summarized as follows: Year Sales Collections Accounts Written Off 2015 $751,000 $733,000 864,000 938,000 $5,300 2016 876,000 975,000 6,200...
19. The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting...
19. The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debt expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the balance of the Allowance for Bad Debts reported on the balance sheet at December 31, 2015? A) $7,275 B) $3,075 C) $7,000 D) $5,285 20. Which of the following...
Multiple Choice Question 106 Which of the following accounts is classified as a contra revenue account? Sales Returns and Allowances Purchase Discounts Cost of Goods Sold Sales Revenue Multiple Choice Question 107 Sales revenues are usually considered earned when goods have been transferred from the seller to the buyer. adjusting entries are made. cash is received from credit sales. an order is received.
4. Jackson Co. currently has an Allowance for Doubtful Accounts (contra account to accounts receivable) credit balance of $22,000. The year-end Accounts Receivable balance (gross) is $425,000. Jackson Co. estimates that they should have 3.5% of total year sales in their Allowance for Doubtful Accounts at year-end. Note: Total year sales were $1.3 million. a. Prepare the necessary entry to adjust the Allowance for Doubtful Accounts to the correct balance. b. What is the correct balance for Jackson Co. year-end...
D) $3,360 12. Under the allowance method of accounting for credit losses, the entry to write off a specific account: A) Will increase total assets B) Debits Bad Debts Expense and credits Allowance for Doubtful Accounts C) is the same as the entry to write off a specific account under the direct write-off method D) Does not affect net income or total assets 13. Boulder Beaver Company had a $150.000 beginning balance in Accounts Receivable and a $6,000 credit balance...
Multiple Choice Question 113 Blue Spruce Corp. uses the percentage-of-receivables method for recording bad debt expense. The Accounts Receivable balance is $400000 and credit sales are $1600000. Management estimates that 6 % of accounts receivable will be uncollectible. What adjusting entry will Blue Spruce Corp. make if the Allowance for Doubtful Accounts has a credit balance of $4000 before adjustment? Bad Debt Expense 16000 Accounts Receivable 16000 Bad Debt Expense 20000 Allowance for Doubtful Accounts 20000 Bad Debt Expense 8000...
Multiple Choice Question 99 Under the allowance method of accounting for uncollectible accounts, O allowance for Doubtful Accounts is closed each year to Income Summary. the cash realizable value of accounts receivable is greater before an account is written off than after it is written off. O bad Debt Expense is debited when a specific account is written off as uncollectible. O the cash realizable value of accounts receivable in the balance sheet is the same before and after an...
2
A company had net sales of $520,000, total sales of $670,000, and an average accounts receivable of $84,000. Its accounts receivable turnover equals: Multiple Choice 0.16 0.13 7.98 O.78 6.19 A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $31,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance...
b. Comment on the use of the one percent rate to provide for
credit losses in part a.
Allowance Method Steinbrook Company, which has been in business for three years, makes all of its sales on account and does not offer cash discounts. The firm's credit sales, collections from custom- ers, and write-offs of uncollectible accounts for the three-year period are summarized as follows: Year Sales Collections Accounts Written Off 2015 $751,000 $733,000 864,000 938,000 $5,300 2016 876,000 975,000 6,200...
19. The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debt expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the balance of the Allowance for Bad Debts reported on the balance sheet at December 31, 2015? A) $7,275 B) $3,075 C) $7,000 D) $5,285 20. Which of the following...
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