ACC 201 - CHAPTER 7

Review the statements below and choose the one that correctly describes a control account

A control account appears in the general ledger and is supported by a subsidiary ledger.

Ace Company sells merchandise to a customer in the amount of $200 on credit, terms n/30. The entry to record this sale would include a debit to the ______ account:

Accounts Receivable

To record a sale on account, the company should debit:

Accounts Receivable

On August 1, Harris Co. determines that it cannot collect $200 from its customer, L. Dash. Harris Co. uses the direct write-off method, so they will record the write-off of this account by debiting:

Bad Debt Expense

Iron Company collects cash in full from a customer who purchased merchandise last month on credit. To record the receipt of cash, Iron Company should make the following entries in the general journal.

Credit to Accounts Receivable Debit to Cash

A company estimates that $1,000 of its accounts receivable is uncollectible at the end of the period and will make the following adjusting entry:

Debit to Bad Debts Expense for $1,000 Credit to Allowance for Doubtful Accounts

The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible. No attempt is made to predict bad debts.

True

The two most common _____ receivables are receivables and _____ receivables.

accounts notes

A(n) ______ is a supplementary record created to maintain a separate account for each customer.

accounts receivable ledger

The (allowance/direct write-off) method of accounting for bad debts records estimated bad debts expense in the period when the related sales are recorded.

allowance

On July 10, Yao Co. collects $740 from Ean, Inc. from a prior credit sale. This entry would be recorded by Yao with a:

debit to Cash. credit to Accounts Receivable.

The __ method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible. No attempt is made to predict bad debts expense.

direct write-off

A ______ is an amount due from another party.

receivable

An accounts receivable ledger:

records journal entries that affect accounts receivable. is a supplementary record to maintain an account for each customer.

Explain what a control account is by completing the following sentence. A control account appears in the general ledger and is supported by information in a separate (general/subsidiary) ledger.

subsidiary