07 - SB: Estimating Bad Debts (7 - 11 min)Assignment

Lani Co. uses the allowance method to account for bad debts. At the end of the year their unadjusted trial balance shows an accounts receivable balance of $400,000; allowance for doubtful accounts balance of $400 (debit); and sales of $1,200,000. Based on history, Lani estimates that bad debts will be 1% of accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of: Multiple choice question. $12,400 $3,600 $11,600 $12,000 $4,000 $4,400

$4,400

Finish Co. uses the allowance method to account for bad debts. At the end of 2010, Finish Co.'s unadjusted trial balance shows an accounts receivable balance of $30,000; allowance for doubtful accounts balance of $200 (credit); and sales of $600,000. Based on history, Finish estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of: Multiple choice question. $5,800 $500 $6,200 $100 $6,000

$6,000

Leo Co. uses the allowance method to account for bad debts. At the end of the year, Leo Co.'s accounts receivable balance is $25,000; allowance for doubtful accounts balance of $100 (debit balance); and sales of $500,000. Based on history, Leo estimates that bad debts will be 2% of accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of: Multiple choice question. $600 $10,000 $400 $500

$600

At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible. Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a: Multiple choice question. 1. debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts 2. debit to Accounts Receivable and credit to Bad Debts Expense 3. debit to Bad Debts Expense and credit to Accounts Receivable 4. debit to Allowance for Doubtful Accounts and credit to Bad Debts Expense

1. debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts

At year-end, Avis Company estimates that $2,000 of its accounts receivable balance is uncollectible. Avis uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a credit to: Multiple choice question. 1. Uncollectible Accounts Expense 2. Accounts Receivable 3. Bad Debts Expense 4. Allowance for Doubtful Accounts

4. Allowance for Doubtful Accounts

The _________ of accounts receivable method uses several percentages to estimate the allowance.

aging

The __________ method of estimating bad debts uses both past and current receivables information to estimate the allowance amount. Specifically, each receivable is classified by how long it is past its due date. Multiple choice question. aging of receivables percentage of sales percentage of receivables

aging of receivables

The ________ method of estimating allowance for doubtful accounts is based on the idea that a given percent of a company's credit sales for the period are uncollectible. Multiple choice question. aging of receivables percentage of sales percentage of accounts receivable

percentage of sales

Leo Co. uses the allowance method to account for bad debts. At the end of the year, Leo Co.'s accounts receivable balance is $25,000; allowance for doubtful accounts balance of $100 (credit); and sales of $500,000. Based on history, Leo estimates that bad debts will be 2% of accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of: Multiple choice question. $600 $400 $9,900 $500 $10,100 $10,000

$400

Yates Co. uses the allowance method to account for bad debts. At the end of the period, Yate's unadjusted trial balance shows an accounts receivable balance of $10,000; allowance for doubtful accounts balance of $400 (credit); and sales of $500,000. Based on history, Yates estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to bad debts expense in the amount of: Multiple choice question. $5,400 $1,400 $5,000 $4,600 $600

$5,000

Ana Co. uses the allowance method to account for bad debts. At the end of the period, Ana's unadjusted trial balance shows an accounts receivable balance of $40,000; allowance for doubtful accounts balance of $300 (credit); and sales of $500,000. Based on history, Ana estimates that bad debts will be 2% of accounts receivable. The entry to record estimated bad debts will include a debit to bad debts expense in the amount of: Multiple choice question. $9,700 $10,000 $1,100 $500 $10,300 $800

$500

Finish Co. uses the allowance method to account for bad debts. At the end of the year, Finish Co.'s unadjusted trial balance shows an accounts receivable balance of $30,000; allowance for doubtful accounts balance of $200 (debit balance); and sales of $600,000. Based on history, Finish estimates that bad debts will be 1% of accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of: Multiple choice question. $100 $500 $300 $6,000

$500

On December 31, DVS Company estimates that $2,500 of its accounts receivable balance is uncollectible. DVS uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a: (Check all that apply.) Multiple select question. 1. debit to Allowance for Doubtful Accounts for $2,500. 2. debit to Bad Debts Expense for $2,500. 3. credit to Accounts Receivable for $2,500. 4. credit to Allowance for Doubtful Accounts for $2,500.

2. debit to Bad Debts Expense for $2,500. 4. credit to Allowance for Doubtful Accounts for $2,500.

The __________ method, also referred to as balance sheet method, uses balance sheet relations to estimate bad debts—mainly, the relationship between accounts receivable and the allowance account. Multiple choice question. 1. percentage of sales 2. allowance 3. aging of accounts receivable 4. bad debts

3. aging of accounts receivable