Chapter 8 Quiz

The adjusting entry to record the estimated bad debt in the period credit sales occur would normally include a debit to: A. Bad debt expense in a credit to allowance for doubtful accounts B. Bad debt expense and a credit to accounts receivable C. Allowance for doubtful accounts in a credit to accounts receivable D. Accounts receivable and a credit to allowance for doubtful accounts

A

The allowance for doubtful accounts account is a contra-account that offsets: A. Accounts receivable B. Bad debt expense C. Cash D. Net income

A

The adjusting entry used to record the estimated bad debt in the period credit sales occur decreases: A. Assets and increases liabilities B. Both net income and accounts receivable C. Both selling expense and net income D. Net income and increases liabilities

B

Recording the estimate a bad debt expense: A. Increases assets B. Is done at the same time the bad debt is known C. Follows the expense recognition matching principle D. Increase net income

C

When the allowance method is used, the entry to record the write off specific uncollectible accounts (step two of the allowance method) would decrease: A. Bad debt expense B. Accounts receivable, net C. The allowance for doubtful accounts account D. Net income

C

And objective of the expense recognition principle, matching, is to have bad debt expense debited in: A. The same period that the related accounts receivable is determined to be uncollectible B. A later period after the related credit sales are recorded C. The period that a customer eventually becomes bankrupt D. The same period the related credit sales are recorded

D

Wechsler Company uses the aging of Accounts Receivable method. The company performed an aging of Accounts Receivable on December 31 and gather: the following information: Accounts receivable: $605000 An adjusted credit balance in allowance for doubtful accounts: 84000 Estimated uncollectible accounts receivable: 93000 What is the amount of accounts receivable, net that will be reported on the balance sheet at December 31? A. 512000 B. 419000 C. 596000 D. 512000

D

Wrangler Inc. uses the percentage of credit sales method to estimate pads the expense. At the end of the year, the company is an adjusted child balance includes the following: Accounts receivable: $366000 Allowance for doubtful accounts (credit balance): $1900 Net credit sales: $917000 Wrangler has experience bad that loss of 0.8% of credit sales in prior Periods. What is the bad debt expense to be recorded for this year? A. 8319 B. 6419 C. 5436 D. 7336

D