Question : 86.Gideon Company uses the allowance method of accounting for uncollectible : 1258895

 

 

86.Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. On July 10, the entry or entries Gideon makes to record the recovery of the bad debt is:    

A. Accounts Receivable—A. Hopkins2,000

Allowance for Doubtful Accounts 2,000

Cash2,000

Accounts Receivable—A. Hopkins 2,000

 

 

B. Cash2,000

Bad debts expense 2,000

 

 

C. Accounts Receivable—A. Hopkins2,000

Bad debts expense 2,000

Cash2,000

Accounts Receivable—A. Hopkins 2,000

 

 

D. Allowance for Doubtful Accounts2,000

Accounts Receivable—A. Hopkins 2,000

Accounts Receivable—A. Hopkins2,000

Cash 2,000

 

 

E. Cash2,000

Accounts Receivable—A. Hopkins 2,000

 

 

 

 

 

87.The allowance method based on the idea that a given percent of a company’s credit sales for the period is uncollectible is:    

A. The percent of sales method.

 

B. The percent of accounts receivable method.

 

C. The aging of accounts receivable method.

 

D. Direct write-off method.

 

E. Factoring method.

 

 

 

 

88.A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and the length of time past due is the:   

A. Direct write-off method.

 

B. Aging of accounts receivable method.

 

C. Percentage of sales method.

 

D. Aging of investments method.

 

E. Percent of accounts receivable method.

 

 

 

 

89.Which of the following is an accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected?   

A. Allowance method of accounting for bad debts.

 

B. Aging of notes receivable.

 

C. Adjustment method for uncollectible debts.

 

D. Direct write-off method of accounting for bad debts.

 

E. Cash basis method of accounting for bad debts.

 

 

 

 

90.On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $95,250; Allowance for Doubtful Accounts, credit balance of $921. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?    

A. $5,715.

 

B. $6,636.

 

C. $4,794.

 

D. $5,770.

 

E. $5,660.

 

Desired balance in allowance account:$95,250 * .06 =$5,715 credit

Current balance in allowance account:   -921 credit

Required: amount of Bad Debts Expense: $4,794 credit

 

 

 

 

91.A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $375. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?    

A. Bad Debts Expense15,750

Allowance for Doubtful Accounts 15,750

 

 

B. Bad Debts Expense15,375

Allowance for Doubtful Accounts 15,375

 

 

C. Bad Debts Expense16,125

Allowance for Doubtful Accounts 16,125

 

 

D. Accounts Receivable15,750

Bad Debts Expense375

Sales 16,125

 

 

E. Accounts Receivable16,125

Allowance for Doubtful Accounts 16,125

 

 

Desired balance in allowance account:15,750 credit

Current balance:        375 debit

Required: adjustment to allowance$16,125 credit

 

 

 

 

92.A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts: 

Accounts receivable$375,000 debit

Allowance for uncollectible accounts500 debit

Net Sales800,000 credit

All sales are made on credit. Based on past experience, the company estimates that 0.6% of credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?    

A. $1,275

 

B. $1,775

 

C. $4,500

 

D. $4,800

 

E. $5,500

$800,000 * 0.006 = $4,800

 

 

 

93.A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts: 

Accounts receivable$375,000 debit

Allowance for uncollectible accounts500 debit

Net Sales800,000 credit

All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?    

A. Debit Bad Debts Expense $2,130; credit Allowance for Doubtful Accounts $2,130.

 

B. Debit Bad Debts Expense $2,630; credit Allowance for Doubtful Accounts $2,630.

 

C. Debit Bad Debts Expense $4,300; credit Allowance for Doubtful Accounts $4,300.

 

D. Debit Bad Debts Expense $4,800; credit Allowance for Doubtful Accounts $4,800.

 

E. Debit Bad Debts Expense $5,300; credit Allowance for Doubtful Accounts $5,300.

$800,000 * 0.006 = $4,800

 

 

 

94.A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:    

A. $3,600

 

B. $3,568

 

C. $3,632

 

D. $2,800

 

E. $4,400

 

Desired balance in allowance account:$90,000 × .04 =$3,600 credit

Current balance in allowance account:    +800 debit

Adjustment to allowance: $4,400 credit

 

 

 

 

95.Jasper makes a $25,000, 90-day, 7% cash loan to Clayborn Co. Jasper’s entry to record the transaction should be:    

A. Debit Notes Receivable for $25,000; credit Cash $25,000.

 

B. Debit Accounts Receivable $25,000; credit Notes Receivable $25,000.

 

C. Debit Cash $25,000; credit Notes Receivable for $25,000.

 

D. Debit Notes Payable $25,000; credit Accounts Payable $25,000.

 

E. Debit Notes Receivable $25,000; credit Sales $25,000.