FUND.ACCT.PRIN.
25th Edition
ISBN: 9781260247985
Author: Wild
Publisher: RENT MCG
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Textbook Question
Chapter 9, Problem 4QS
Distinguishing between allowance method and direct write-off method P1 P2
Indicate whether each statement best describes the allowance (A) method or the direct write-off (DW) method.
_1. Does not predict
___2.
___3. The write-off of a specific account does not affect net income.
_4. When an account is written off. the debit is to Bad Debts Expense.
___5. Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which
usually occurs in a period after the credit sale.
_G. Estimates bad debts expense related to the sales recorded in that period.
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Students have asked these similar questions
. Which method of recording bad debt loss is consistent with
accrual accounting?
a. Allowance method
b. Direct writeoff method
c. Percent of sales method
d. Percent of accounts receivable method
- When the allowance method is used, the entry to record
the writeoff of a specific account would
Decrease both accounts receivable and the allowance
b. Decrease accounts receivable and increase allowance
Increase both accounts receivable and the allowance
d. Increase accounts receivable and decrease the allowance
3. Under the allowance method, the journal entry to record
the writeoff of a specific uncollectible account
a. Affects neither net income nor working capital
b. Affects neither net income nor accounts receivable
c. Decreases both net income and working capital
d. Decreases both net income and accounts receivable
4. Under the allowance method, the entries at the time of
collection of an account previously written off would
a. Decrease the allowance for doubtful accounts
b. Increase net…
A
B
UD
C
|7. If bad debts expense is determined by estimating uncollectible accounts receivable,
the entry to record the write-off of a specific uncollectible account would decrease:
allowance for uncollectible accounts.
net income.
net book value of accounts receivable.
bad debts expense.
8. If management intentionally underestimates bad debts expense, then net income is
A overstated and assets are understated.
B understated and assets are overstated
C
understated and assets are understated.
D overstated and assets are overstated
9. Which of these items will not appear in the retained earnings statement?
A
Net Loss
B
Prior period adjustment, net of taxes
с Cumulative effect on prior years of a change in accounting principles, net of tax
D
Dividends.
E
All of the above appear in the statement of retained earnings
Indicate whether each statement best describes the allowance method or the direct write-off method.
List
1. Does not predict bad debts expense.
2. Accounts receivable on the balance sheet is reported at net realizable value.
3. The write-off of a specific account does not affect net income.
4. When an account is written off, the debit is to Bad Debts Expense.
5. Usually does not best match sales and expenses because bad debts expense is not recorded until an account
becomes uncollectible, which usually occurs in a period after the credit sale.
6. Estimates bad debts expense related to the sales recorded in that period.
Method
Allowance
Direct write-off
Chapter 9 Solutions
FUND.ACCT.PRIN.
Ch. 9 - Credit card sales Prepare journal entries for the...Ch. 9 - Direct write-off method P1 Solstice Company...Ch. 9 - Recovering a bad debt P1 Solstice Company...Ch. 9 - Distinguishing between allowance method and direct...Ch. 9 - Prob. 5QSCh. 9 - Allowance method for bad debts P2 Gomez Corp. uses...Ch. 9 - Reporting allowance for doubtful accounts P2 On...Ch. 9 - Prob. 8QSCh. 9 - Prob. 9QSCh. 9 - Aging of receivables method P3 ^ Net Zero...
Ch. 9 - Prob. 11QSCh. 9 - Prob. 12QSCh. 9 - Prob. 13QSCh. 9 - Prob. 14QSCh. 9 - Prob. 15QSCh. 9 - Prob. 16QSCh. 9 - Prob. 17QSCh. 9 - Prob. 18QSCh. 9 - Prob. 19QSCh. 9 - Prob. 20QSCh. 9 - Prob. 21QSCh. 9 - Exercise 9-1
Accounts receivable subsidiary...Ch. 9 - Prob. 2ECh. 9 - Exercise 9-3
Sales on store credit card
C1
Z-Mart...Ch. 9 - Exercise 9-4
Direct write-off method
Dexter...Ch. 9 - Exercise 9-5 Writing off receivables P2
On January...Ch. 9 - Exercise 9-6 Percent of sales method; write-off...Ch. 9 - Exercise 9-7 Percent of accounts receivable...Ch. 9 - Exercise 9-8 Aging of receivables method P3
Daley...Ch. 9 - Exercise 9-9 Percent of receivables method...Ch. 9 - Exercise 9-10 Aging of receivables schedule...Ch. 9 - Exercise 9-10
Estimating bad debts
P3
At December...Ch. 9 - Exercise 9-11
Notes receivable...Ch. 9 - Exercise 9-12
Notes receivable transactions...Ch. 9 - Exercise 9-14 Honoring a note P4
Prepare journal...Ch. 9 - Exercise 9-15 Dishonoring a note P4
Prepare...Ch. 9 - Exercise 9-16 Selling and pledging accounts...Ch. 9 - Exercise 9-17 Accounts receivable turnover A1 Q...Ch. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Prob. 21ECh. 9 - Prob. 22ECh. 9 - Prob. 23ECh. 9 - Problem 9-1A Sales on account and credit card...Ch. 9 - Problem 9-2A Estimating and reporting bad debts P2...Ch. 9 - Problem 9-3A Aging accounts receivable and...Ch. 9 - Problem 9-4A Accounts receivable transactions and...Ch. 9 - Problem 9-5A Analyzing and journalizing notes...Ch. 9 - Problem 9-1B Sales on account and credit card...Ch. 9 - Problem 9-2B Estimating and reporting bad debts P2...Ch. 9 - Problem 9-3B Aging accounts receivable and...Ch. 9 - Problem 9-4B Accounts receivable transactions and...Ch. 9 - Prob. 5PSBCh. 9 - SP 9 Santana Rey: owner of Business Solutions,...Ch. 9 - Prob. 1GLPCh. 9 - Prob. 1AACh. 9 - Prob. 2AACh. 9 - Prob. 3AACh. 9 - Prob. 1DQCh. 9 - Why does the direct write-off method of accounting...Ch. 9 - Prob. 3DQCh. 9 - Why might a business prefer a note receivable to...Ch. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Anton Blair is the manager of a medium-size...Ch. 9 - Prob. 2BTNCh. 9 - Prob. 3BTNCh. 9 - Prob. 4BTNCh. 9 - Prob. 5BTN
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What is the impact on the accounting equation when an accounts receivable is collected? A. both sides increase B. both sides decrease C. only the Asset side changes D. the total of neither side changesarrow_forwardIndicate by a (+), (), or (0) whether each of the following events would most likely cause accounts receivable (AR), sales, and profits to increase, decrease, or be affected in an indeterminate manner:arrow_forwardEach time an account is written off under the direct write-off method, Bad Debt Expense is debited.arrow_forward
- Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance methodarrow_forwardIndicate whether each statement best describes the allowance (A) method or the direct write-off (DW)method. Does not predict bad debts expense.arrow_forwardIndicate whether each statement best describes the allowance method or the direct write-off method. List 1. Usually does not best match sales and expenses because Bad Debts Expense is not recorded until an account becomes uncollectible, which usually occurs in a period after the credit sale. 2. When an account is written off, the debit is to Bad Debts Expense. 3. Does not predict Bad Debts Expense. 4. Accounts receivable on the balance sheet is reported at net realizable value. 5. Estimates Bad Debts Expense related to the sales recorded in that period. 6. Matches the estimated loss from uncollectible accounts receivable against the sales they helped create. Method Allowance Direct write-offarrow_forward
- Indicate whether each statement best describes the allowance (A) method or the direct write-off (DW)method. When an account is written off, the debit is to Bad Debts Expense.arrow_forwardWhich following statement is a correct statement about the direct write-off method for calculating credit loss expense? A. It is in accordance with GAAP. B. It uses an allowance for credit losses account. C. It tends to understate accounts receivable on the balance sheet. D. It recognizes credit loss expense when a specific account is determined to be uncollectible.arrow_forwardUsing the following key, identify the effects of the following transactions or conditions on the various financial statement elements: I = increases; D = decreases; NE = no effect. A.credit sale b. Collection of a portion of accounts receivable c. Estimate of bad debts d. Write-off of a specific uncollectible accountarrow_forward
- When the allowance method of recognizing uncollectible accounts is used, the entry to record the write off of a specific account would A. decrease both accounts receivable and the allowance for uncollectible accounts B. decrease accounts receivable and increase the allowance for uncollectible accounts C. increases the allowance for uncollectible accounts and decrease net income D. decrease both accounts receivable and net incomearrow_forwardUnder the direct charge-off method, when a specific account receivable is written off, what account is debited and what is the effect of the write-off on net income and on assets? debit Accounts Receivable; the write off decreases net income and total assets debit Allowance for Uncollectible Accounts; the write off increases net income and total assets debit Uncollectible Accounts Expense the write off decreases net income and total assets debit Uncollectible Accounts Expense; the write off increases net income and total assets Aarrow_forwardThe allowance for doubtful is not: a. credited when bad debts expense is estimated and recorded b. a liability account c. used instead of reducing accounts receivable directly d. a contra asset account e. debited when uncollectible accounts are written offarrow_forward
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