Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 5, Problem 2E
Exercise 7-1A Analysis of financial statement effects of accounting for uncollectible accounts under the allowance method
Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting events:
- 1. Recognition of uncollectible accounts expense through a year-end
adjusting entry. - 2. Write-off of uncollectible accounts.
- 3. Recognition of revenue on account.
- 4. Collection of cash from accounts receivable.
Required
Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one shown next. Use the following coding scheme to record your answers: increase is +, decrease is −, not affected is NA. In the
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Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting
events:
a. Recognition of uncollectible accounts expense through a year-end adjusting entry.
b. Write-off of uncollectible accounts.
c. Recognition of revenue on account.
d. Collection of cash from accounts receivable.
Required
Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one shown
here. Use the following coding scheme to record your answers: increase is +, decrease is –, leave the cell blank for not affected. In the
cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first
transaction is entered as an example.
Effect of Events on the Financial Statements
Balance Sheet
Income Statement
Stockholders'
Net
Event
Assets
Liabilities
Revenue
Expense
Cash Flow
Equity
Income
1.
%3D
+
2.
3.
4.
+
1. A note receivable due in 18 months is listed on the balance sheet under the caption
A. current assets
B. investments
C. long-term liabilities
D. fixed assets
2. Two methods of accounting for uncollectible accounts are the
A. direct write-off method and the accrual method
B. direct write-off method and the allowance method
C. allowance method and the accrual method
D. allowance method and the net realizable method
3. What is the type of account and normal balance of Allowance for Doubtful Accounts?
A. contra asset, debit
B. asset, credit
C. contra asset, credit
D. asset, debit
Using the allowance method, the effect on the current year’s financial statements of writing off an account receivable generally is to a. Decrease total assets.b. Decrease net income.c. Both a. and b.d. Neither a. nor b.
Chapter 5 Solutions
Survey Of Accounting
Ch. 5 - 1. What is the difference between accounts...Ch. 5 - Prob. 2QCh. 5 - 3. What type of account is the Allowance for...Ch. 5 - 4. What are two ways in which estimating...Ch. 5 - 5. When using the allowance method, why is...Ch. 5 - 6. What is the most common format for reporting...Ch. 5 - 7. Why is it necessary to mate an entry to...Ch. 5 - 8. What are some factors considered in estimating...Ch. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - 14. What is an advantage of using the percent of...Ch. 5 - 15. What is aging of accounts receivable?Ch. 5 - Prob. 16QCh. 5 - Prob. 17QCh. 5 - Prob. 18QCh. 5 - 21. What is accrued interest?Ch. 5 - How does the accrual of interest revenue or...Ch. 5 - Prob. 21QCh. 5 - Prob. 22QCh. 5 - Prob. 23QCh. 5 - Prob. 24QCh. 5 - Prob. 25QCh. 5 - 26. What types of costs do businesses avoid when...Ch. 5 - 1. Name and describe the four cost flow methods...Ch. 5 - 2. What are some advantages and disadvantages of...Ch. 5 - Prob. 29QCh. 5 - Prob. 30QCh. 5 - 5. In an inflationary period, which inventory cost...Ch. 5 - 6. In an inflationary period, which inventory cost...Ch. 5 - 7. What is the difference between the flow of...Ch. 5 - Prob. 34QCh. 5 - Prob. 35QCh. 5 - Prob. 36QCh. 5 - Prob. 37QCh. 5 - Prob. 38QCh. 5 - Prob. 39QCh. 5 - Prob. 1ECh. 5 - Exercise 7-1A Analysis of financial statement...Ch. 5 - Prob. 3ECh. 5 - Effect of recognizing uncollectible accounts...Ch. 5 - Analyzing financial statement effects of...Ch. 5 - Effect of recovering a receivable previously...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Roth Service Co. experienced the following...Ch. 5 - Prob. 11ECh. 5 - On May 1, 2018, Benzs Sandwich Shop loaned 10,000...Ch. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Luna Company accepted credit cards in payment for...Ch. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - The Shirt Shop had the following transactions for...Ch. 5 - Prob. 21ECh. 5 - Accounting for uncollectible accountstwo cycles...Ch. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Sage Inc. experienced the following transactions...Ch. 5 - The following transactions apply to Hooper Co. for...Ch. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - The following trial balance was prepared for Tile,...Ch. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 1ATCCh. 5 - Prob. 3ATCCh. 5 - Prob. 4ATCCh. 5 - Alonzo Saunders owns a small training services...
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