ACC Chapter 7

debit to Credit Card Expense for $20. credit to Sales for $500. debit to Cash for $480.

. Jameson Co. sold $500 of merchandise on Master Card credit sales. The net cash receipts from the sale are immediately deposited in the seller's bank account. Master Card charges a 4% fee. The journal entry to record this sales transaction would include a:

Credit to Allowance for Doubtful Accounts Debit to Bad Debts Expense for $1,000

A company estimates that $1,000 of its accounts receivable is uncollectible at the end of the period and will make the following adjusting entry:

Allowance for Doubtful Accounts

A company has $150,000 of credit sales during the year and estimates that $1,000 of its accounts receivable will be uncollectible. The adjusting entry will include a credit to:

Accounts Receivable. Cash.

Acel Co. uses the allowance method to account for bad debts. In January, Acel determined that it could not collect $400 from CTR, Inc. and wrote the balance off. On October 21, Acel received a check for $400 from CTR. The entries to record the receipt of cash on October 21 would include a debit to: (Check all that apply.)

$500-> $40,000 x 2%=800-300=$500

Ana Co. uses the allowance method to account for bad debts. At the end of the period, Ana's unadjusted trial balance shows an accounts receivable balance of $40,000; allowance for doubtful accounts balance of $300 (credit); and sales of $500,000. Based on history, Ana estimates that bad debts will be 2% of accounts receivable. The entry to record estimated bad debts will include a debit to bad debts expense in the amount of:

the seller does not have to evaluate customer credit. cash is received from the credit card company faster than from a credit customer. a variety of payment options typically increase sales volume. the seller avoids the risk of customer non-payment.

Companies allow customers to pay for products using third-party credit cards because: Multiple select question. there is no cost to the seller to allow third-party credit cards. incorrect the seller does not have to evaluate customer credit. correct cash is received from the credit card company faster than from a credit customer. correct a variety of payment options typically increase sales volume. correct the seller avoids the risk of customer non-payment.

Subsidiary

Explain what a control account is by completing the following sentence. A control account appears in the general ledger and is supported by information in a separate (Blank) Ledge

credit to Accounts Receivable - ZRT. debit to Allowance for Doubtful Accounts.

Lina Co. uses the allowance method to account for bad debts. On January 28, Lina determines that a $200 balance from ZRT, Inc. is uncollectible and writes the balance off. The journal entry to write this balance off will include a: (Check all that apply.)

Sales in the amount for $500

Woodstock Co. had $500 of credit cards sales. The net cash receipts were deposited immediately into Woodstock's bank account less a 2% fee. The entry to record this sales transaction would include a credit to: Multiple choice question. Sales for $490

debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.

Zino Company determines that a customer balance of $200,from Hollis Co. is uncollectible. Zino uses the allowance method to account for bad debts. The entry to write off the uncollectible balance will include a:

total uncollectible accounts

he allowance for doubtful accounts is a contra asset account that equals:

debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts

At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible. Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a:

$20 $2,000 x 6% x 60/360

On August 21, Alix Company receives a $2,000, 60-day, 6% note from a customer as payment on her account. How much interest will be due on October 20, the due date?

credit to Allowance for Doubtful Accounts for $2,500. debit to Bad Debts Expense for $2,500.

On December 31, DVS Company estimates that $2,500 of its accounts receivable balance is uncollectible. DVS uses the allowance method to account for bad debts. The entry to record this adjusting entry would include a: (Check all that apply.)

credit to Interest Revenue for $25. credit to Note Receivable for $5,000. debit to Cash for $5,025. Credit to Interest Revenue for $25. $5,000 x .06 x 30/360=$25.

On January 1, Franz Co. accepted a 30-day, 6% note in the amount of $5,000 from Bria Co., a customer. On January 31, the due date of the note, Bria honors the note and pays in full. The journal entry that Franz would make to record payment of this note would include a:

debit to Notes Receivable for $6,000. credit to Accounts Receivable for $6,000.

On November 1, Eli Co. received a $6,000, 60-day, 6% note from a customer as payment on his $6,000 overdue account. Eli's journal entry to record this transaction on November 1, would include a:

Materiality Constraint

The (Blank) constraint is permitted under GAAP when the results approximate those using the allowance method.

aging

The (aging/percent)Field 1Field 1 aging , Correct Unavailable of accounts receivable method uses several percentages, based on how long an account is past due, to estimate the allowance.

Allowance

The (allowance/direct write-off) method of accounting for bad debts records estimated bad debts expense in the period when the related sales are recorded.

percentage of sales

The Blank______ method of estimating allowance for doubtful accounts is based on the idea that a given percent of a company's credit sales for the period are uncollectible.

aging of accounts receivable

The Blank______ method, also referred to as balance sheet method, uses balance sheet relations to estimate bad debts—mainly, the relationship between accounts receivable and the allowance account.

aging of receivables

The __ method of estimating bad debts uses both past and current receivables information to estimate the allowance amount. Specifically, each receivable is classified by how long it is past its due date.

Reports accounts receivable balance at the estimated amount to be collected Matches expenses in the same period with the related sales

The advantages of using the allowance method to account for bad debts include which of the following? (Check all that apply.)

expense recognition

The direct write-off method records bad debts expense only when a specific account becomes uncollectible, which is not always in the same period as the sale. For this reason, the direct write-off method violates the Blank______ principle.

Expense Recognition Principle

The direct write-off method records bad debts expense only when an account becomes uncollectible, which is not always in the same period as the sale. For this reason, the direct write-off method violates the (Blank) principle.

Real value

The expected proceeds from accounts receivable, determined by taking accounts receivable less the allowance for doubtful accounts, is called:

principal x interest rate x time expressed in fraction of year

To compute interest due on a maturity date, use the formula:

Time expressed in fraction of year Principal Interest rate

To compute interest due on a maturity date, you should multiply which of the following factors?

Reinstate, receipt

When an account previously written off is later collected, two journal entries are required. The first journal entry is to Blank______ the account, and the second journal entry is to record Blank______ of payment.