Smartbook

Yates Co. uses the allowance method to account for bad debts. At the end of the period, Yate's unadjusted trial balance shows an accounts receivable balance of $10,000; allowance for doubtful accounts balance of $400 (credit); and sales of $500,000. Based on history, Yates estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to bad debts expense in the amount of:

$5,000 Since this is based on a percentage of sales, you should simply multiply $500,000 x .01 = $5,000.

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:

$500

To record a sale on account, the company should debit:

Accounts Receivable.

Accounts Receivable

Amounts due from customers for credit sales

Notes receivable

An asset consisting of a written promise to receive a definite sum of money on demand or on specific future dates

On August 1, Hanes Co. determines that it cannot collect $150 from a customer. Hanes uses the direct write-off method. Hanes will record the write-off of this account by debiting:

Bad Debts Expense for $150.

The two most common receivables are receivables and receivables.

Blank 1: accounts or account Blank 2: notes or note

In September, DK Company sells merchandise to Lions Company on credit. In October, Lions Company pays the balance in full. The entry to record the collection of cash by DK Company in October will include a (debit/credit) to Accounts Receivable.

Blank 1: credit

Receivable matches

Choice, Amount due from another party Amount due from another party

Iron Company collects cash in full from a customer who purchased merchandise last month on credit. To record the receipt of cash, Iron Company should make the following entries in the general journal. (Check all that apply.)

Debit to Cash Credit to Accounts Receivable

True or false: The allowance method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible. No attempt is made to predict bad debts.

False

True or false: The direct write-off method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.

False

A(n) ____________ is a supplementary record created to maintain a separate account for each customer.

accounts receivable ledger

On February 15, Symth Co. determines that it cannot collect $500 owed by its customer, A. Winds. Symth records the loss using the direct write-off method. This entry to record the write-off on February 15 would include a: (Check all that apply.)

credit to Accounts Receivable - A. Winds. debit to Bad Debts Expense.

The ____________ method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible. No attempt is made to predict bad debts expense.

direct write-off

A _________________ is an amount due from another party.

receivable

A company sells merchandise to a customer on credit. The journal entry to record this transaction would include a debit entry to the Accounts account.

receivable

An accounts receivable ledger: (Check all that apply.)

-----is a supplementary record to maintain an account for each customer. ------records journal entries that affect accounts receivable.

The allowance for doubtful accounts is a(n) (current/contra/opposite) asset account and has a normal credit balance.

contra