ACCT Ch 5
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
Allowance for Uncollectible Accounts has a credit balance because it is a(n) _____ account.
contra-asset
The income statement approach for estimating bad debts uses a percentage of
credit sales.
The income statement approach for estimating bad debts focuses on
current year's credit sales.
Shannon Corp. uses the aging method to account for bad debt expense. Shannon determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include
debit Allowance for Uncollectible Accounts.
The account "Allowance for Uncollectible Accounts" normally has a
debit balance
The Accounts Receivable account is reduced when the seller:
determines that a specific customer account will not be collectible
When the allowance method is used, the write-off of an uncollectible account:
has no effect on net income
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
The direct write-off method is required for
income tax purposes.
Pixie Inc. writes off a specific accounts receivable. If Pixie is using the allowance method, the write off will _____ net income.
not affect
The direct write-off method is used when
uncollectible accounts are not anticipated or are immaterial.
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
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.