Question

0. Allowance for Doubtful Accounts on the balance sheet: a is offset against total current assets. b. increases the cash realizable value of accounts receivable. c appears under the heading "Other Assets." d. is deducted from accounts receivable. or a company with significant uncollectible receivables, the direct write-off method is unsuitable because: A) it overstates liabilities on the balance sheet. B) it violates the matching principle. C) direct write-offs would be immaterial. D) it is not allowed for tax reasons. 18. The Allowance for Bad Debts account has a credit balance of $2,000. The company's management estimates that 29% 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 amount of Bad Debts Expense reported on the income statement for 2015? A) $5,000 B) $3,075 C) $2,875 D) $2,675 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 receivables would not be classified as an "other receivable"? a. Advance to an employee b. Refundable income tax c. Notes receivable d. Interest receivable 21. Notes or accounts receivables that result from sales transactions are often called a. sales receivables. b. non-trade receivables. c. trade receivables.

Answer 1

(16) -Allowance for doubtfel accounts on the balance sheet Offset against accounts receivable is i s option * is correct. Allowance for clubtfut accounts on the balance sheet the contra account to the accounts receivable, which means that allowable for doubtful accounts e made only to reduce the value of accounts recenable (17) Option 'B' is correct. Pt violates the matching poinciple. Under the alboance method the expense is more closely matched with revenues. 18) G Given data, Bad Debts have the credit bulane = $ 2000 Net Sales for the year = $250000 Uncollectable amount : 27.250OUD .. $500D. Bad Debts expense reported on the income Statement for 2015 = $soud Option "t is coorect