Subsequent Valuation of Accounts Receivable

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

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

net credit sales.

Cobalt Corp. uses the allowance method to account for bad debts. If Cobalt writes off an account for $3,000, what is the effect on the balance sheet?

no effect on total assets

For accounts receivable, the longer an account is outstanding,

the more likely it will prove uncollectible.

The direct write-off method is used when

uncollectible accounts are not anticipated or are immaterial.

Under the allowance method, when is bad debt expense recognized?

when the allowance is created

When an accounts receivable is written off, which account is impacted?

Allowance for uncollectible accounts

When a previously written off account is collected, what happens after the reinstatement?

Collection is recorded with a debit to cash and a credit to accounts receivable.

When an account previously written off is collected in full, the entry to reinstate the account would require which of the following?

Credit Allowance for Uncollectible Accounts. Debit Accounts Receivable.

What happens when a receivable previously written off is collected in full?

Reinstate the receivable and the allowance for uncollectible accounts.

True or False: The direct write-off method could result in a mismatching of expenses and revenue

True

True or false: The CECL model broadens information that creditors should consider when estimating credit losses.

True, it takes a broader approach to estimating bad debt than current GAAP

When does the actual write-off of a receivable occur?

When it is determined that all or a portion of the receivable will not be collected.

The entry to write-off an uncollectible account includes the following:

a debit to the allowance account and a credit to accounts receivable

Accounts receivable are initially recorded at the exchange price agreed upon by the buyer and seller and subsequently reduced by which of the following?

allowance for uncollectible accounts allowance for sales returns

To record bad debts at the end of the period, an adjustment would be made by a credit to

allowance for uncollectible accounts.

Which method of estimating bad debts is required by GAAP when the amount of bad debt is material?

allowance method

The balance sheet approach to measuring bad debt expense focuses on

appropriate carrying value of accounts receivable.

For most credit sales, revenue and the related expenses should be reported

at the point of delivery.

The expense associated with the estimate of the amount of accounts receivable that may not be collected during the year is referred to as

bad debt expense.

The following information is taken from Landon Corp.'s accounting records: Account Beginning Balance Ending Balance Accounts Receivable BB $100,000 EB $130,000 Allowance for Uncollectible Accounts BB 12,000 EB 16,000 During the year, Landon wrote off $7,000 of accounts receivable that were uncollectible. The adjustment to record bad debt expense at the end of the period was

credit to Allowance for Uncollectible Accounts for $11,000. debit to Bad Debt Expense for $11,000. Reason: $16,000 + $7,000 - $12,000

The following information is taken from Connor Corp.'s accounting records: Accounts Receivable BB $100,000 EB $140,000 Allowance for Uncollectible Accounts BB 15,000 EB 18,000 During the year, Connor wrote off $17,000 of accounts receivable that were uncollectible. The adjustment to record bad debt expense at the end of the period was

credit to Allowance for Uncollectible Accounts for $20,000. debit to Bad Debt Expense for $20,000. Reason: $18,000+$17,000-$15,000

Joyce determines that a customer account of $20,000 should be written off as uncollectible. The journal entry to write off the account using the allowance method will include which of the following entries?

credit to accounts receivable debit to allowance for uncollectible accounts

Planters Corp. has an account that was written off in April. In the following month, Planters collected from the customer in full. The entry to reinstate the account would require

debit to Accounts Receivable. credit to Allowance for Uncollectible Accounts.

Shannon Corp. determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include

debit to Allowance for Uncollectible Accounts. credit to Accounts Receivable

When a specific account receivable is determined to be uncollectible, which of the following occur?

Account receivable is reduced Allowance account is reduced

How does the CECL model differ from current GAAP?

Bad debt estimates will be based on predictions about the future. The "probable" threshold for identifying impaired receivables is removed.

Sully Corporation uses an allowance method for accounting for bad debt expense. Sully estimates that 2% of sales will eventually become uncollectible. If Sully has $100,000 of credit sales and $100,000 of cash sales during the year, the adjustment for estimated uncollectible accounts will require a

debit to Bad Debt Expense for $2,000 Reason: Only $100,000 of the sales are on credit

The direct write-off method is required for

income tax purposes but is not GAAP

An aging schedule classifies accounts receivable based on

length of time outstanding

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.


Kaugnay na mga set ng pag-aaral

Testing and Measurement - Test 1 - Dr. Alvarez

View Set

Criminal Justice Revel Pearson Chapter 8

View Set

Consumer Behavior - Comprehensive Test

View Set

1601 Quiz 10 Information Security Fundamentals

View Set