Question :
11) What the effect the accounting equation of writing off : 1253204
11) What is the effect on the accounting equation of writing off an uncollectible account of $75?
A) increase assets $75 and decrease liabilities $75
B) decrease assets $75 and decrease liabilities $75
C) decrease assets $75 and increase expense $75
D) no net effect on total assets
12) In 2011, Seven Seas sold $20,000 worth of merchandise on account. Its accountant estimated that $400 of that amount would be uncollectible. In 2011, Saki, a Japanese customer, purchased $500 of merchandise on account from Seven Seas. In 2012, Saki declared bankruptcy while still owing the $500. What is the amount of bad debts expense Seven Seas should report on
December 31, 2011?
A) $100
B) $400
C) $500
D) $900
13) In preparing the financial statements for January, the accountant for Team Shirts has compiled the following information: accounts receivable are $5,000; the amount estimated to be uncollectible is 3% of sales for the month; sales for the month were $43,000; and the balance in the allowance for uncollectible accounts is a positive $1,000. Using the sales method, the amount of bad debts expense for January is ________.
A) $290
B) $1,000
C) $1,290
D) $2,290
14) In preparing the financial statements for January, the accountant for Team Shirts has compiled the following information: accounts receivable are $5,000; the amount estimated to be uncollectible is 10% of receivables; sales for the month were $43,000; and the balance in the allowance for uncollectible accounts is a positive $100. Using the accounts receivable allowance method, the amount of bad debts expense for January is ________.
A) $100
B) $500
C) $600
D) $4,300
15) In February, one of Team Shirts’ best customers went bankrupt owing Team Shirts $85. Team Shirts uses the sales method for estimating bad debts. February sales were $15,000. The accountant has been using 3% of sales as the estimated bad debts percentage. Before adjustment and the write-off, the balance in the allowance for uncollectible accounts was $(100). After the write-off and adjustment, the balance in the allowance for uncollectible accounts should be ________.
A) $450
B) $365
C) $465
D) $550
16) Team Shirts had an unadjusted balance in its Allowance for uncollectible accounts of $(875) on August 31. This amount was “left over” at the end of August because not as many accounts were written off as previously anticipated. An aging of accounts receivable at August 31 revealed an estimate of $1,000 for uncollectible accounts. Using the accounts receivable allowance method, bad debts expense for August should be:
A) $125.
B) $275
C) $1,000.
D) $1,875.
17) What is the effect on the accounting equation when a company collects an account receivable?
A) Total assets increase, total liabilities increase, and total shareholders’ equity stays the same.
B) Total assets stay the same, total liabilities stay the same, and total shareholders’ equity stays the same.
C) Total assets decrease, total liabilities stay the same, and total shareholders’ equity decreases.
D) Total assets stay the same, total liabilities increases, and total shareholders’ equity decreases.
18) X Company has the following accounting balances at the end of the year before adjustments:
Accounts receivable
$ 50,000
Allowance for uncollectible accounts
(1,000)
Net sales
100,000
Bad debts expense
0
The company estimates that 2% of net sales will be uncollectible. After the correct adjusting entry has been made, which of the following is correct about Bad debts expense for the year and Allowance for uncollectible accounts at the end of the year?
A) Bad debts expense will be $2,000 on the income statement and Allowance for uncollectible accounts will be $(3,000) on the balance sheet.
B) Bad debts expense will be $3,000 on the income statement and Allowance for uncollectible accounts will be $(2,000) on the balance sheet.
C) Bad debts expense will be $3,000 on the balance sheet and Allowance for uncollectible accounts will be $(3,000) on the income statement.
D) Bad debts expense will be $1,000 on the income statement and Allowance for uncollectible accounts will be $(2,000) on the balance sheet.
19) Y Company has the following accounting balances at the end of the year before adjustments:
Accounts receivable
$ 25,000
Allowance for uncollectible accounts
(1,000)
Net sales
200,000
Bad debts expense
0
The company estimates that 20% of accounts receivable will be uncollectible. After the correct adjusting entry has been made, which of the following is correct about Bad debts expense for the year and Allowance for uncollectible accounts at the end of the year?
A) Bad debts expense will be $4,000 on the income statement and Allowance for uncollectible accounts will be $(5,000) on the balance sheet.
B) Bad debts expense will be $4,000 on the income statement and Allowance for uncollectible accounts will be $(4,000) on the balance sheet.
C) Bad debts expense will be $5,000 on the balance sheet and Allowance for uncollectible accounts will be $(5,000) on the income statement.
D) Bad debts expense will be $5,000 on the income statement and Allowance for uncollectible accounts will be $(5,000) on the balance sheet.
20) When Y Company later records the write-off of a specific customer’s account receivable, its total assets will ________.
A) increase
B) decrease
C) remain the same
D) The answer cannot be determined from the information given.
