Allowance Method - 7
net realizable value
The amount of accounts receivable a business expects to collect.
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
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.
percentage of sales
The expected proceeds from accounts receivable, determined by taking accounts receivable less the allowance for doubtful accounts, is called:
realizable value
When an account previously written off is later collected, two journal entries are required. The first journal entry is to _____ the account, and the second journal entry is to record _____ of payment.
reinstate, receipt
The allowance for doubtful accounts is a contra asset account that equals:
total uncollectible accounts
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:
$6,000 allowance for doubtful accounts - contra asset account to accounts receivable bad debt - expense / income statement
Conroy Company uses the allowance method to account for bad debts. During 2010, Conroy determined that a balance of $200 for Alegia Co. was uncollectible and wrote the balance off. What is the total decrease to net income related to this entry?
0
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:
Allowance for Doubtful Accounts
Avia Company determines that a customer balance of $400 from Allia, Inc. is uncollectible. Avia uses the allowance method to account for bad debts. The entry to write off the uncollectible balance will include a debit to:
Allowance for Doubtful Accounts
The advantages of using the allowance method to account for bad debts include which of the following?
Matches expenses with related sales Reports accounts receivable balance at net realizable value
Allowance for doubtful debts
a negative asset account that records the balance of doubtful debts (that are unlikely to be collected in the future but have not yet been written off)
The (blank) of accounts receivable method uses several percentages to estimate the allowance.
aging / balance sheet method
The allowance for doubtful accounts is a
contra asset account has a normal credit balance
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.
aging of accounts receivable
which method of accounting for bad debts matches the estimated loss from uncollectible accounts receivables against the sales they helped produce?
allowance method
