Chapter 5

allowance for uncollectible accounts

contra asset account representing the amount of accounts receivable that we do not expect to collect

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 noncurrent asset

Amend Inc. debited Accounts Receivable and credited Allowance for Doubtful Accounts to reestablish an account previously written off. Amend Inc. should also debit _______ and credit _______. Allowan

Cash; Accounts Receivable

Which of the following is true regarding Allowance for Uncollectible Accounts?

It is subtracted from the balance of Accounts Receivable in the balance sheet

The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as ___________method of accounts receivable.

aging

sales allowance

contra rev credit allowed a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the vendor's accounts receivable debit salaes allowance credit -ar

sales discount

contra rev offer a customer a reduction if payment is made within a specifufed period of time debit cash and sales disocunt credit -ar

sales return

credit allowed a customer for the sales price of returned merchandise, resulting in a decrease in the vendor's accounts receivable\\\ debit sales return credit account receivable

Ophelia Inc. just learned that Patton Inc., one of its customers with an outstanding accounts receivable balance, filed for bankruptcy. Assuming that the company utilizes the allowance method, Ophelia should record a(n):

decrease in Accounts Receivable

The effect of a sales allowance will result in which of the following:

descrease net incom

trade discount

reduction in the listed price of a product or service

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

Allowance method (GAAP)

some account receivable will not be collected estimate uncollectable account reduce assets( AR) increase expense ( bad debt expense)

compute net revenue

total rev- sales discount- sales allowance