Question : 11. The allowance for bad debts represents: A. bad debt losses incurred in : 1224911

11. The allowance for bad debts represents: A. bad debt losses incurred in the current period.B. the amount of uncollected accounts written off to date.C. the difference between total sales made on credit and the amount collected from those credit sales.D. the difference between the recorded value of accounts receivable and the net realizable value of accounts receivable.

12. Digital CorporationThe following data concern Digital Corporation for 2012. 

Credit sales during the year

$2,400,000

Accounts receivable–December 31, 2012

410,000

Allowance for bad debts–December 31, 2012

55,000

Bad debt expense for the year

35,000

Refer to the information provided for Digital Corporation. What amount will Digital show on its year-end balance sheet for the net realizable value of its accounts receivable? A. $410,000B. $295,000C. $340,000D. $355,000

13. Digital CorporationThe following data concern Digital Corporation for 2012. 

Credit sales during the year

$2,400,000

Accounts receivable–December 31, 2012

410,000

Allowance for bad debts–December 31, 2012

55,000

Bad debt expense for the year

35,000

Refer to the information provided for Digital Corporation. What are the effects on the accounting equation when Digital makes the adjustment to record bad debt expense using the allowance method? A. Assets increase and liabilities decreaseB. Assets and equity decreaseC. Assets increase and equity decreasesD. Assets decrease and equity increases

14. Digital CorporationThe following data concern Digital Corporation for 2012. 

Credit sales during the year

$2,400,000

Accounts receivable–December 31, 2012

410,000

Allowance for bad debts–December 31, 2012

55,000

Bad debt expense for the year

35,000

Refer to the information provided for Digital Corporation. What are the effects on the accounting equation when Digital writes off a bad debt under the allowance method? A. Assets decrease and equity increaseB. Assets and equity decreaseC. Assets increase and equity decreasesD. No effect on overall assets or equity

15. On December 1, 2012, Alex’s Drug Store concluded that a customer’s $325 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on Alex’s 2012 net income and balance sheet totals assuming the allowance method is used to account for bad debts? A. Decrease in net income; decrease in total assetsB. Increase in net income; no effect on total assetsC. No effect on net income; decrease in total assetsD. No effect on net income; no effect on total assets

16. Two methods of accounting for uncollectible accounts are the: A. direct write-off method and the allowance method.B. allowance method and the accrual method.C. allowance method and the net realizable method.D. direct write-off method and the accrual method.

17. One of the weaknesses of the direct write-off method is that it: A. understates accounts receivable on the balance sheet.B. violates the matching principle.C. is too difficult to use for many companies.D. is based on estimates.

18. If the allowance method of accounting for uncollectible receivables is used, which ledger account is credited to write off a customer’s account as uncollectible? A. Uncollectible accounts expenseB. Accounts receivableC. Allowance for bad debtsD. Interest expense

19. Which one of the approaches for the allowance procedure emphasizes matching bad debts expense with revenue on the income statement? A. The percentage-of-receivables approachB. The percentage-of-sales approachC. The percentage of accounts written off approachD. The direct write off method

20. Which of the following statements is true regarding the two allowance approaches used to estimate bad debts? A. The percentage-of-sales approach takes into account the existing balance in the Accounts Receivable account.B. The direct write-off method takes into account the existing balance in the Allowance for Bad Debts account.C. The percentage-of-receivables approach takes into account the existing balance in the Allowance for Bad Debts account.D. The direct write-off method does a better job of matching revenues and expenses than allowance method.