210 smartbook 2
Allowance for Uncollectible Accounts has a credit balance because it is a(n) Blank______ account.
contra asset
The allowance method estimates
uncollectible accounts
direct write off method is used when
uncollectible accounts are not anticipated or are immaterial.
Prime Corp. has an ending balance in the accounts receivable account of $100,000. Prime recorded bad debt expense of $3,000. Prime has an ending balance in the allowance for uncollectible accounts of $7,000. What is the net accounts receivable balance?
93,000
When an account previously written off is collected in full, which is required to ensure the accounting for the complete payment history of the customer?
An entry to reinstate the account receivable and an entry to record payment.
The allowance for uncollectible accounts is a contra account to
accounts recievable
A partial adjustment to the amount owed by the customer for goods that were not returned, but did not fully meet the customer's expectations is referred to as a sales
allowance
To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to
allowance for uncollectible accounts
A company that expects that some of its customers will not pay the agreed upon sales price must utilize the
allowance method
The account "Allowance for Uncollectible Accounts" normally has a ---- balance
credit
The income statement approach for estimating bad debts uses a percentage of
credit sales
Planters Corp. wrote off a customer's uncollectible account in April. In the following month, Planters collected from the customer in full. The entry to reinstate the account would require a
credit to allowance for uncollected accounts
The journal entry to record bad debt expense includes:
credit to allowance for uncollectible accounts, debit to bad 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?
debit to allowance for uncollectible accounts, credit to accounts recievable
The Accounts Receivable account is reduced when the seller:
determines that a specific customer account will not be collectible
The formula for calculating interest on a note is
face value x annual rate x fraction of the annual period.
True or false: Accounts receivable not expected to be collected should be counted in the assets of the company until they are later written off.
false
The allowance method is required by
gaap
Where is a note receivable reported in the balance sheet?
in either current or non current assets
The direct write-off method is required for
income tax purposes
Receivables not expected to be collected should
not be counted in assets of the company.
`A formal, signed credit agreement between a lender and a borrower is called a(n) Blank______ by the lender.
note recievable
Raven receives a 3-year note receivable from a customer for goods sold. How should Raven report this note receivable in its financial statements?
as a non current asset
With the allowance method, bad debt expense is recorded
at the end of the period when bad debts are estimated.
Amend Inc. debited Accounts Receivable and credited Allowance for Uncollectible Accounts to reestablish an account previously written off. Amend Inc. should also debit Blank______ and credit Blank______.
cash, accounts recievable
A cash discount representing a reduction in the amount to be paid by a credit customer if the customer pays within a specified period of time is also referred to as
sales discount
When a customer returns a product for a refund, in which account is the entry recorded?
sales return