Question : 13.2   Learning Objective 13-2 1) Gross Accounts Receivable $15,000. Allowance for : 1171040

13.2   Learning Objective 13-2

1) Gross Accounts Receivable is $15,000. Allowance for Doubtful Accounts has a credit balance of $300. Net credit sales for the year are $140,000. In the past, 1% of credit sales had proved uncollectible. What would be the adjusted balance of the Allowance account under the income statement approach?

A) $2,400

B) $1,700

C) $1,400

D) $1,100

2) Gross Accounts Receivable is $17,000. Allowance for Doubtful Accounts has a credit balance of $100. Net credit sales for the year are $120,000. In the past, 2% of credit sales had proved uncollectible, and an aging of the receivables indicates $2,100 as uncollectible. What would be the adjusted balance of the Allowance account under the balance sheet approach?

A) $2,000

B) $2,500

C) $2,100

D) $2,200

3) Using the aging method, estimated uncollectible accounts are $3,000. If the balance in the Allowance for Doubtful Accounts is a $600 debit before adjustment, what is the Bad Debts Expense adjustment for the period?

A) $3,000

B) $3,600

C) $2,400

D) $600

4) At December 31, 201X, Brooke’s Horse Stable unadjusted Allowance for Doubtful Accounts showed a credit balance of $432. An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for Bad Debts Expense:

A) includes a credit to the Allowance account for $568.

B) includes a debit to the Allowance account for $42.

C) includes a debit to the Allowance account for $822.

D) includes a credit to the Allowance account for $1,432.

5) Which method uses an aging of Accounts Receivable to calculate the Bad Debts Expense?

A) Income statement approach

B) Aging the Accounts Receivable approach

C) Balance sheet approach

D) Direct write-off

6) Harry’s Hardware estimates that approximately $1.75 out of every $100 of credit sales proves to be uncollectible. Harry calculates Bad Debts Expense using the:

A) aging the Accounts Receivable approach.

B) direct write-off method.

C) balance sheet approach.

D) income statement approach.

7) The current balance of Allowance for Doubtful Accounts is considered when calculating the current period’s Bad Debts Expense under the following approach:

A) Balance sheet approach

B) Income statement approach

C) Direct write-off method

D) All of these answers are correct.

8) Joe’s Auto Repair estimates that approximately 3% of net credit sales are uncollectible. Joe’s calculates Bad Debts Expense using the:

A) direct write-off method.

B) income statement method.

C) gross method.

D) balance sheet method.

9) Gross Accounts Receivable is $20,000. Allowance for Doubtful Accounts has a credit balance of $400. Net credit sales for the year are $125,000. In the past, 2% of credit sales had proved uncollectible, and an aging of the receivables indicates $1,500 is doubtful. Under the income statement approach, Bad Debts Expense for the year is:

A) $1,900.

B) $2,900

C) $2,500.

D) $1,100.

10) Gross Accounts Receivable is $20,000. Allowance for Doubtful Accounts has a credit balance of $400. Net credit sales for the year are $125,000. In the past, 2% of credit sales had proved uncollectible, and an aging of the receivables indicates $1,500 is doubtful. Under the balance sheet approach, Bad Debts Expense for the year is:

A) $1,900.

B) $2,900.

C) $2,500.

D) $1,100.