Chapter 5 ACCT Quiz
Based on the following information, what amount will be reported as bad debt expense for 2012 if the aginf of accounts receivable approach to estimate bad debts? (% of receivables method) Credit sales = $2,000,000 Sales return and allowances=40,000 Accounts receivable at 12/31/12=610,000 Allowance for bad debts before adjustment=15,000 Estimated uncollected amounts=55,000
$40,000
George Company uses the direct write off method to account for bad debts. How does the entry to record the write off of a customer's account balance impact the accounting equation?
Assets and equity decrease
Tanning Company uses the percentage pf receivables method for recording bad debt expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging analysis of accounta receivable shows the 5% will be uncollectable. What adjusting entry should the company make as the allowance for bad debt account has a credit balance of $2,000 before the adjustment?
Debit to bad debt expense for $13,000, credit to allowance for bad debts for $13,000
On December 1, 2013, a drug store concluded thag a customer's $325 account receivable was uncollectable. What effect will the write off have on the company's 2013 net income and balance sheet totals if the direct write of method is used for bad debt?
Decrease total assets and retained earnings
