ACCT Ch 5

Joyce Corp. uses the percentage-of-receivables method to account for bad debt expense. Joyce determines that a customer account of $20,000 should be written off as uncollectible. The write off of the account will include which of the following entries?

Credit to Accounts Receivable Debit to Allowance for Uncollectible Accounts

Allowance for Uncollectible Accounts has a credit balance because it is a(n) _____ account.

contra-asset

The income statement approach for estimating bad debts uses a percentage of

credit sales.

The income statement approach for estimating bad debts focuses on

current year's credit sales.

Shannon Corp. uses the aging method to account for bad debt expense. Shannon determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include

debit Allowance for Uncollectible Accounts.

The account "Allowance for Uncollectible Accounts" normally has a

debit balance

The Accounts Receivable account is reduced when the seller:

determines that a specific customer account will not be collectible

When the allowance method is used, the write-off of an uncollectible account:

has no effect on net income

Using a percentage of each period's net credit sales to estimate bad debt expense is a(n) __________ approach to measuring bad debts.

income statement

The direct write-off method is required for

income tax purposes.

Pixie Inc. writes off a specific accounts receivable. If Pixie is using the allowance method, the write off will _____ net income.

not affect

The direct write-off method is used when

uncollectible accounts are not anticipated or are immaterial.

Two entries are required when a previously written off account is collected. These two entries include:

reinstate the account receivable record the collection on the account receivable

When the direct write-off method is used, an entry for bad debt expense is required

when the account receivable is determined to be uncollectible.