ACCT 2010 Exam 3 – CLEMSON with
Accurate Solutions
On-a-Roll, Inc. amortizes its copyright of $20,000 over 20 years. Miss Hap, the
bookkeeper, forgot to record the amortization in the current year. The effect of this
mistake causes ______. - ANSWER-assets to be overstated
net income to be overstated
Which of the following is contra-asset account? - ANSWER-Allowance for Doubtful
Accounts
During the year, ABC Corp. realizes that a particular customer will never pay. What
action should ABC take? - ANSWER-Write off the uncollectible account and its
corresponding allowance from the accounting records.
Which method requires estimating the amount of the Bad Debt Expense and then
determining the balance in the Allowance for Doubtful Accounts which will differ from
the expense if there is an unadjusted balance? - ANSWER-Percentage of credit sales
method
Management estimates that 1% of the $100,000 of credit sales will be uncollectible. The
Allowance for Doubtful Accounts has a $100 unadjusted credit balance. Using the
percentage of credit sales method, the adjusting entry to record estimated bad debts
includes a ______. - ANSWER-credit to Allowance for Doubtful Accounts of $1,000
debit to Bad Debt Expense of $1,000
If the Allowance for Doubtful Accounts has a credit balance prior to recording the
adjusting entry for the current period's uncollectible accounts, then the ______. -
ANSWER-estimated amount of uncollectibles was greater than the amounts actually
written off
Using the allowance method, which is the correct adjusting journal entry to record bad
debt expense? - ANSWER-Debit Bad Debt Expense and credit Allowance for Doubtful
Accounts
The entry that includes a debit to Allowance for Doubtful Accounts and a credit to
Accounts Receivable is a(n) ______. - ANSWER-write-off of a specific customer's
account
percentage of credit sales - ANSWER-simpler to apply but less accurate
, aging of accounts receivable - ANSWER-uses more detailed data and is more accurate
direct write off - ANSWER-Choice
not considered an acceptable method under GAAP
Delectable, Inc.'s unadjusted trial balance includes Accounts Receivable of $10,000;
Allowance for Doubtful Accounts of $50 credit balance; and Sales Revenue of $100,000
(all on credit). Management estimates that 2% of credit sales will be uncollectible.
Delectable's financial statements will show ______. - ANSWER-Allowance for Doubtful
Accounts of $2,050 credit balance
Bad Debt Expense of $2,000
The journal entry to record the payment of salaries and wages to employees includes a
______. - ANSWER-credit to Withheld Income Tax Payable
credit to Cash
debit to Salaries and Wages Expense
credit to FICA Payable
Net pay is calculated by ______. - ANSWER-subtracting payroll deductions from gross
pay
John Smith works 40 hours for ABC Corp. for $15 per hour. Required payroll deductions
are: Social Security $37.20; Medicare $8.70; Federal income tax $58; and State income
tax $10. Assuming that John gets paid in cash and payroll deductions will be paid the
following month, how would ABC record his gross pay? - ANSWER-Salaries and Wages
Expense increases $600.
On November 1, ABC Corp. borrowed $100,000 cash on a 1-year, 6% note payable that
requires ABC to pay both principal and interest on October 31 of the following year. The
journal entry on November 1, would include which of the following? - ANSWER-credit to
Note Payable $100,000
debit to Cash $100,000
Under US GAAP, a contingent liability should ______. - ANSWER-be reported on the
balance sheet if the loss will probably occur and can be reasonably estimated
be in the notes to the financial statements if the loss may possibly occur and can be
reasonably estimated
not be reported if the loss is remote and unable to be estimated
_______________ _______________is a liability that represents the amount the
company owes to others as a result of issuing a promissory note. - ANSWER-notes
payable
John Smith works 40 hours for ABC Corp. for $15 per hour. Required payroll deductions
are: Social Security $37.20; Medicare $8.70; Federal Income Tax $58; and State
Accurate Solutions
On-a-Roll, Inc. amortizes its copyright of $20,000 over 20 years. Miss Hap, the
bookkeeper, forgot to record the amortization in the current year. The effect of this
mistake causes ______. - ANSWER-assets to be overstated
net income to be overstated
Which of the following is contra-asset account? - ANSWER-Allowance for Doubtful
Accounts
During the year, ABC Corp. realizes that a particular customer will never pay. What
action should ABC take? - ANSWER-Write off the uncollectible account and its
corresponding allowance from the accounting records.
Which method requires estimating the amount of the Bad Debt Expense and then
determining the balance in the Allowance for Doubtful Accounts which will differ from
the expense if there is an unadjusted balance? - ANSWER-Percentage of credit sales
method
Management estimates that 1% of the $100,000 of credit sales will be uncollectible. The
Allowance for Doubtful Accounts has a $100 unadjusted credit balance. Using the
percentage of credit sales method, the adjusting entry to record estimated bad debts
includes a ______. - ANSWER-credit to Allowance for Doubtful Accounts of $1,000
debit to Bad Debt Expense of $1,000
If the Allowance for Doubtful Accounts has a credit balance prior to recording the
adjusting entry for the current period's uncollectible accounts, then the ______. -
ANSWER-estimated amount of uncollectibles was greater than the amounts actually
written off
Using the allowance method, which is the correct adjusting journal entry to record bad
debt expense? - ANSWER-Debit Bad Debt Expense and credit Allowance for Doubtful
Accounts
The entry that includes a debit to Allowance for Doubtful Accounts and a credit to
Accounts Receivable is a(n) ______. - ANSWER-write-off of a specific customer's
account
percentage of credit sales - ANSWER-simpler to apply but less accurate
, aging of accounts receivable - ANSWER-uses more detailed data and is more accurate
direct write off - ANSWER-Choice
not considered an acceptable method under GAAP
Delectable, Inc.'s unadjusted trial balance includes Accounts Receivable of $10,000;
Allowance for Doubtful Accounts of $50 credit balance; and Sales Revenue of $100,000
(all on credit). Management estimates that 2% of credit sales will be uncollectible.
Delectable's financial statements will show ______. - ANSWER-Allowance for Doubtful
Accounts of $2,050 credit balance
Bad Debt Expense of $2,000
The journal entry to record the payment of salaries and wages to employees includes a
______. - ANSWER-credit to Withheld Income Tax Payable
credit to Cash
debit to Salaries and Wages Expense
credit to FICA Payable
Net pay is calculated by ______. - ANSWER-subtracting payroll deductions from gross
pay
John Smith works 40 hours for ABC Corp. for $15 per hour. Required payroll deductions
are: Social Security $37.20; Medicare $8.70; Federal income tax $58; and State income
tax $10. Assuming that John gets paid in cash and payroll deductions will be paid the
following month, how would ABC record his gross pay? - ANSWER-Salaries and Wages
Expense increases $600.
On November 1, ABC Corp. borrowed $100,000 cash on a 1-year, 6% note payable that
requires ABC to pay both principal and interest on October 31 of the following year. The
journal entry on November 1, would include which of the following? - ANSWER-credit to
Note Payable $100,000
debit to Cash $100,000
Under US GAAP, a contingent liability should ______. - ANSWER-be reported on the
balance sheet if the loss will probably occur and can be reasonably estimated
be in the notes to the financial statements if the loss may possibly occur and can be
reasonably estimated
not be reported if the loss is remote and unable to be estimated
_______________ _______________is a liability that represents the amount the
company owes to others as a result of issuing a promissory note. - ANSWER-notes
payable
John Smith works 40 hours for ABC Corp. for $15 per hour. Required payroll deductions
are: Social Security $37.20; Medicare $8.70; Federal Income Tax $58; and State
