11 a bad debts recovery has what effect on the balance sheet under the allowance met 4306881

11 a bad debts recovery has what effect on the balance sheet under the allowance met 4306881

11) A bad debts recovery has what effect on the balance sheet under the allowance method for bad debts?

A) It has no effect on total assets or stockholders' equity.

B) It decreases assets and decreases stockholders' equity.

C) It increases assets and decreases stockholders' equity.

D) It decreases assets and has no effect on stockholders' equity.

E) It has no effect on assets and decreases owner's equity.

12) The accounts receivable subsidiary ledger

A) is not effected by the write-off of individual accounts.

B) provides the supporting detail (i.e., individual customer names and amounts owed) for the general ledger account “Accounts Receivable.”

C) is kept for both the “Accounts Receivable” and the “Allowance for Uncollectible Accounts” accounts.

D) is only kept by companies that use the allowance method of estimating bad debts.

E) All of the above are true statements.

13) Emerz Corporation had sales of $850,000, of which 20% were cash sales. As of year-end, the balance in the Allowance for Uncollectible Accounts before adjusting for bad debts was a $400 debit. The company estimates bad debts as 10% of ending accounts receivable or 1.5% of credit sales. What is the journal entry that Emerz Corporation will make if it estimates bad debts by using a percentage of credit sales?

A) Bad Debts Expense 9,800

Allowance for Uncollectible Accounts 9,800

B) Bad Debts Expense 10,200

Allowance for Uncollectible Accounts 10,200

C) Bad Debts Expense 10,600

Allowance for Uncollectible Accounts 10,600

D) Bad Debts Expense 12,350

Allowance for Uncollectible Accounts 12,350

E) Bad Debts Expense 12,750

Allowance for Uncollectible Accounts 12,750

14) Emerz Corporation had sales of $850,000, of which 20% were cash sales. As of year-end, the balance in the Allowance for Uncollectible Accounts before adjusting for bad debts was a $400 debit. The company estimates bad debts as 10% of ending accounts receivable or 1.5% of credit sales. What is the balance in the Allowance for Uncollectible Accounts after Emerz Corporation estimates bad debts using a percentage of credit sales?

A) $9,800

B) $10,200

C) $10,600

D) $12,350

E) $12,750

15) Emerz Corporation had sales of $850,000, of which 20% were cash sales. As of year-end, the balance in the Allowance for Uncollectible Accounts before adjusting for bad debts was a $400 debit. The company estimates bad debts as 10% of ending accounts receivable or 1.5% of credit sales. The ending balance in Accounts Receivable is $72,000. What is the balance in the Allowance for Uncollectible Accounts if Emerz Corporation estimates bad debts using a percentage of ending accounts receivable?

A) $6,800

B) $7,200

C) $7,600

D) $85,000

E) $84,600

16) Nolan Company had total credit sales for the past year of $800,000. As of year-end, but before estimating bad debts, the company had a $70,000 debit balance in accounts receivable and a $600 debit balance in the Allowance for Uncollectible Accounts. Upon examination of the accounts receivable, it was found that 55% of the balance was 1-30 days old, 30% was 31-60 days old, 9% were 61-90 days old, and 6% were over 90 days old. Nolan Company estimates the following bad debts percentages:

1-30 days 10%

31-60 days 25%

61-90 days 40%

Over 90 days 80%

Which of the following is the journal entry necessary to estimate bad debts using the aging method?

A) Bad Debts Expense 14,380

Accounts Receivable 14,380

B) Bad Debts Expense 14,380

Allowance for Uncollectible Accounts 14,380

C) Bad Debts Expense 14,980

Allowance for Uncollectible Accounts 14,980

D) Bad Debts Expense 15,580

Allowance for Uncollectible Accounts 15,580

E) Bad Debts Expense 16,180

Allowance for Uncollectible Accounts 16,180

17) Assume Credit Categories uses the allowance method for bad debts. Credit Categories wrote off the $400 account of P. Miller on February 19, 20X3. On October 8, 20X3 Credit Categories received a check for $400 from P. Miller. Which of the following is(are) the journal entry(ies) that Credit Categories will make on October 8, 20X3?

A) Bad Debts Expense 400

Accounts Receivable 400

B) Cash 400

Bad Debts Expense 400

C) Accounts Receivable 400

Allowance for Uncollectible Accounts 400

Cash 400

Accounts Receivable 400

D) Cash 400

Accounts Receivable 400

E) No journal entry is required on October 8, 20X3.

18) Reporting Standards, Inc. recovered a bad debt from Plodding, Inc. in October 20X3 in the amount of $350 that was previously written off by Reporting Standards, Inc. in November 20X2. Reporting Standards, Inc. utilizes the percentage of sales method to estimate bad debts. What journal entry is required in October 20X3?

A) Bad debt expense 350

Allowance for uncollectible accounts 350

B) Allowance for uncollectible accounts 350

Bad debt expense 350

C) Bad debt expense 350

Accounts receivable350

D) Accounts receivable 350

Allowance for uncollectible accounts 350

E) Accounts receivable 350

Allowance for uncollectible accounts 350

Cash 350

Accounts receivable 350

19) When an organization sells on credit, it is essentially reducing the risk that a portion of the accounts receivable balance will never be collected.

20) The allowance method has two basic elements: (1) an estimate of the amount of accounts receivable that will ultimately be uncollectible and (2) a contra account that contains the estimate and is deducted from the accounts receivable.

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