CH5 SB

The allowance for uncollectible accounts is a contra account to

accounts receivable.

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.

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

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

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

Credit Sales

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

Decreases; retained

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 ___

G.A.A.P

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

Net revenues

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

Sales Return

A trade discount is

a reduction from list price.

The receivables turnover ratio and the average collection period provide information about a company's

effectiveness in managing receivables

With the allowance method, bad debt expense is recorded

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

The 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, the entry to reverse the previous write-off would require which of the following?

Debit accounts receivable credit allowance for uncollectible accounts

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

Sales to customers in which the customers pay within 30 to 60 days are referred to as (Select all that apply.)

credit sales. sales on account.

The journal entry to record bad debt expense includes: (Select all that apply.)

debit to bad debt expense credit to allowance for uncollectible accounts

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

A trade discount is a reduction from the list price, which is used to: (Select all that apply.)

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

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

future; current

The direct write-off method is required for

income tax purposes.

(Face value x annual interest rate x fraction of the annual period) is the formula for

interest on a note

Pixie Inc. writes off a specific accounts receivable. If Pixie is using the allowance method, the write off will ___ net income

not affect

Accounts receivable are typically classified as current assets because

they will be converted to cash within 1 year.

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.