accy 201 exam 3 ole miss barton Questions and
Verified Answers
direct write-off method Correct Answer: Recording bad debt expense only when an account is
determined to be worthless(used with small companies with few receivables)
allowance method Correct Answer: records bad debt expense by estimating uncollectible accounts at the
end of the accounting period(used with large amount of receivables)
write off using allowance method Correct Answer: allowance for doubtful accounts xxxx
accounts receivable xxxx
reinstate an account after it has been written-off? Correct Answer: accounts receivable xxxx
allowance for doubtful accounts xxxx
cash xxxx
accounts receivable xxxx
Allowance for Doubtful Accounts
What kind of account is it? Correct Answer: -is credited for the estimated bad debts
-contra asset account
net realizable value Correct Answer: -the amount that is expected to be collected or
realized
What is the estimate of uncollectible accounts based on? 3 things . Correct Answer: -futre forecasts
-past experience
-industry averages
, Two methods to estimate uncollectible accounts. Correct Answer: -precent of sales method
-analysis of receivables method
How to get bad debt expense using the percentage of sales method? Correct Answer: credit sales
x bad debt as a percentage of credit sales
analysis of receivables method Correct Answer: based on the assumption that the longer an account
receivable is outstanding, the less likely that it will be collected
How to determine interest? Correct Answer: face amount
x interest rate
x term / 360
What is maturity value? Correct Answer: amount that must be paid at the due date of the note
How to find the maturity value? Correct Answer: face amount (+) interest
Journal entry for recording issuance and maturity of a note. Correct Answer: Notes receivable xxxx
Accounts receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
Cash xxxx
Notes receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
Verified Answers
direct write-off method Correct Answer: Recording bad debt expense only when an account is
determined to be worthless(used with small companies with few receivables)
allowance method Correct Answer: records bad debt expense by estimating uncollectible accounts at the
end of the accounting period(used with large amount of receivables)
write off using allowance method Correct Answer: allowance for doubtful accounts xxxx
accounts receivable xxxx
reinstate an account after it has been written-off? Correct Answer: accounts receivable xxxx
allowance for doubtful accounts xxxx
cash xxxx
accounts receivable xxxx
Allowance for Doubtful Accounts
What kind of account is it? Correct Answer: -is credited for the estimated bad debts
-contra asset account
net realizable value Correct Answer: -the amount that is expected to be collected or
realized
What is the estimate of uncollectible accounts based on? 3 things . Correct Answer: -futre forecasts
-past experience
-industry averages
, Two methods to estimate uncollectible accounts. Correct Answer: -precent of sales method
-analysis of receivables method
How to get bad debt expense using the percentage of sales method? Correct Answer: credit sales
x bad debt as a percentage of credit sales
analysis of receivables method Correct Answer: based on the assumption that the longer an account
receivable is outstanding, the less likely that it will be collected
How to determine interest? Correct Answer: face amount
x interest rate
x term / 360
What is maturity value? Correct Answer: amount that must be paid at the due date of the note
How to find the maturity value? Correct Answer: face amount (+) interest
Journal entry for recording issuance and maturity of a note. Correct Answer: Notes receivable xxxx
Accounts receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
Cash xxxx
Notes receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
