Question : 6) If the direct write-off method of accounting for uncollectible : 1177159

 

6) If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer’s account as uncollectible?

A) Bad Debts Recovered

B) Bad Debts Expense

C) Accounts Receivable

D) Interest Expense

 

7) What would be the basis for the following entry on a firm’s records?

 

Bad Debt Expense

150

Accounts Receivable

150

 

A) The firm is using the direct write-off method.

B) The firm is writing off an uncollectible account.

C) The firm is not using the allowance method for writing off accounts.

D) All of these answers are correct.

 

8) Stacy’s Service Bureau is able to collect an amount previously written off last year under the direct method. The journal entry will:

A) decrease Bad Debts Expense.

B) increase Bad Debts Recovered.

C) decrease Accounts Receivable.

D) decrease Cash.

9) If the direct write-off method is used, the debit account to write off an uncollectible is:

A) Accounts Receivable.

B) Bad Debt Expense.

C) Allowance for Doubtful Accounts.

D) Sales.

 

10) When all of the cash for an account previously written off under the direct write-off method is unexpectedly collected, the correct entry would be:

A) debit Bad Debt Expense and credit Accounts Receivable.

B) debit Accounts Receivable and credit Bad Debt Expense.

C) debit Cash and credit Accounts Receivable.

D) dependent on the period in which the cash was collected.

 

11) To directly write off an account would require a debit to:

A) Allowance for Doubtful Accounts.

B) Accounts Receivable.

C) Bad Debts Expense.

D) Cash.

 

12) To record receipt of money after an account has been written off using the direct method, you would need to:

A) record the receipt of cash.

B) reopen the customer’s account receivable.

C) credit Bad Debts Recovered.

D) All of the above.

13) CJM Sales uses the direct write-off method in accounting for uncollectible accounts.

Record the following transactions in general journal form.

 

May 28 Sold merchandise on account to North End Motors for $15,000.

Jul 11 Received $12,000 from North End Motors on their account.

Jul 30 Wrote off the balance due as uncollectible.

 

14) Mid-Iowa Internet Service uses the direct write-off method for recording bad debts. Journalize the following transactions for Mid-Iowa:

 

2010

Mar. 13Wrote off Pat’s account for $350

Apr. 17Wrote off Cole’s account for $75

Jul. 5Recovered $50 from Cole

2011

Jan. 9Recovered $200 from Pat

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account’s nature.

 

15)

 

Column 1

Column 2

Column 3

Column 4

Cash

 

 

 

 

 

Answer: 

 

Column 1

Column 2

Column 3

Column 4

Cash

asset

debit

balance sheet

permanent