Question

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 in the Allowance for Doubtful Accounts. During the year, credit sales were $600,000 and customers' accounts collected were $590,000. Also, S4,000 in worthless accounts were written off. What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for doubtful accounts? A) $130,000 B) $126,000 C) $154,000 D) $120,000 14. The entry to record the write-off of Sepich, Inc.'s account using the allowance method is! A) Bad Debts Expense Allowance for Doubtful Accounts B) Bad Debts Expense Accounts Receivable--Sepich, Inc. C) Allowance for Doubtful Accounts Accounts Receivable-Sepich, Inc. D) Accounts Receivable--Sepich, Inc. Allowance for Doubtful Accounts 15. Assume the following unadjusted account balances at the end of the accounting period for Margarete CompanyAccounts Receivable, $100,000; Allowance for Doubtful Accounts, $1,400 (debit balance): and Net sales, $1,200,000 i Margarete's past experience indicates credit losses of 1% of net sales, the adjusting entry to estimate doubtful accounts is: 12,000 12,000 A) Bad Debts Expense Accounts Receivable B) Bad Debts Expense Allowance for Doubtful Accounts C) Bad Debts Expense Allowance for Doubtful Accounts 10,600 10,600 13,400 13,400

Answer 1

12 D) Does not affect net income or total assets 13 Accounts receivable balance = $150,000+$600,000-$590,000-$4,000=$156,000 Allowance for doubtful accounts = $6,000-$4,000 =$2,000 Net amount of receivables = $156,000-$2,000 = $154,000 C) $154,000 14 D) Accounts receivable-Sepich Inc. Allowance for doubtful accounts 15 1% of net sales = 1% x $1,200,000 = $12,000 D) Bad debt expense Allowance for doubtful accounts $ 12,000 $ 12,000