ACC 210 CHP. 5

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

The journal entry to record bad debt expense includes:

debit to bad debt expense credit to allowance for uncollectible accounts

A sales allowance ____ the amount owed by the customer for merchandise that is _____ by the customer.

decreases; retained

A trade discount is

reduction in the listed price of a product or service

Tudor Corp. has an ending balance in the accounts receivable account of $20,000. Tudor recorded bad debt expense of $1,000. Tudor has an ending balance in the allowance for uncollectible accounts of $2,000. What is the net accounts receivable balance?

$18,000

The list price in Boyton's catalog indicates that Product A sells for $3,000, with a trade discount of 5%. Boyton sells the goods to a customer who qualifies for the trade discount. At what amount should Boyton record the sale and related account receivable?

$2,850

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

Where is a note receivable reported in the balance sheet?

In either current or noncurrent assets, as appropriate.

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.

Accounts receivable should be classified as a(n)

asset (current asset)

Allowance for Uncollectible Accounts has a credit balance because it is a(n) _____ account.

contra-asset

Gwendolyn uses the allowance method to account for uncollectible receivables. Gwendolyn should record _____ bad debt expense ______.

estimated; at the end of the year

Total revenues less discounts, returns, and allowances are referred to as _________ revenues

net

When the allowance method is used, the write-off of an uncollectible account:

has no effect on net income

Joyce Corp. uses the percentage-of-receivables method to account for bad debt 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?

Credit to Accounts Receivable Debit to Allowance for Uncollectible Accounts

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 Uncollectible Accounts.

Two important ratios that help in understanding a company's effectiveness in managing receivables are the:

receivable turnover ratio average collection period

A(n) ______________ ______________ is the legal right to receive cash from a credit sale and represents an asset of the company.

accounts receivable

The amount of cash owed to a company by its customers from the sale of goods or services is referred to as

accounts receivable

A trade discount is a reduction from the list price, which is used to:

give quantity discounts to customers change prices without publishing a new catalog disguise real prices from competitors

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 a(n) _____________ discount

sales

When a business provides services to a customer, and the customer promises to pay later, this is referred to as

credit sales

Sales to customers in which the customers pay within 30 to 60 days are referred to as

credit sales sales on account

The direct write-off method is used when

uncollectible accounts are not anticipated or are immaterial

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 _______.

Cash; Accounts Receivable

Under the allowance method, companies estimate _____ uncollectible amounts and report those estimates in the _____ year.

future; current

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.

What is the formula for the receivables turnover ratio?

Net credit sales divided by average accounts receivable (net).

The income statement approach for estimating bad debts focuses on

The income statement approach for estimating bad debts focuses on

The account "Allowance for Uncollectible Accounts" is classified as

a contra asset to accounts receivable.

The allowance for uncollectible accounts is a contra account to

accounts receivable

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

aging

A company that expects that some of its customers will not pay the agreed upon sales price must utilize the

allowance method

With the allowance method, bad debt expense is recorded

at the end of the period when bad debts are estimated.

The cost of estimated accounts receivable that will not be collected is referred to as _______ ________ expense

bad debt

A trade discount is recognized

by reducing the revenue amount recorded.

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 a(n) _________ discount.

cash or sales

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

Receivables not expected to be collected should

not be counted in assets of the company

A formal credit arrangement between a creditor and debtor is called a(n)

note receivable

Two entries are required when a previously written off account is collected. These two entries include:

record the collection on the account receivable reinstate the account receivable

Accounts receivable are typically classified as current assets because

they will be converted to cash within 1 year

The allowance method estimates

uncollectible accounts

The direct write-off method is required for

income tax purposes.

When a customer returns a product for a refund, in which account is the entry recorded?

sales return

The allowance method is required by

GAAP

Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to

be more accurate.

Using a percentage of each period's net credit sales to estimate bad debt expense is a(n) ______________ ______________ approach to measuring bad debts.

income statement

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 Accounts Receivable account is reduced when the seller:

determines that a specific customer account will not be collectible

Which of the following is a discount in the amount to be paid if the customer pays within a specified time period?

sales discount

When merchandise is returned for a refund or for credit to be applied to other purchases, the situation is called a(n)

sales return

Net revenues is calculated as total revenues minus which of the following items?

sales returns sales allowances sales discounts


Set pelajaran terkait

The Prologue Review - Messina Quizizz

View Set

N137 Newborn nutrition and feeding

View Set

Ch.13.2 -Protection and Support of the Brain

View Set