ACCY 201 EXAM 3 OLE MISS BARTON QUESTIONS
Direct write-off method - Answer -Recording bad debt expense only when an account is
determined to be worthless(used with small companies with few receivables)
Allowance method - 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 - Answer -allowance for doubtful accounts xxxx
Accounts receivable xxxx
Reinstate an account after it has been written-off? - Answer -accounts receivable xxxx
Allowance for doubtful accounts xxxx
Cash xxxx
Accounts receivable xxxx
Allowance for Doubtful Accounts
What kind of account is it? - Answer --is credited for the estimated bad debts
-contra asset account
Net realizable value - Answer --the amount that is expected to be collected or
Realized
What is the estimate of uncollectible accounts based on? 3 things . - Answer --futre
forecasts
-past experience
-industry averages
Two methods to estimate uncollectible accounts. - Answer --precent of sales method
-analysis of receivables method
How to get bad debt expense using the percentage of sales method? - Answer -credit
sales
X bad debt as a percentage of credit sales
Analysis of receivables method - 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? - Answer -face amount
X interest rate
X term / 360
What is maturity value? - Answer -amount that must be paid at the due date of the note
, How to find the maturity value? - Answer -face amount (+) interest
Journal entry for recording issuance and maturity of a note. - Answer -Notes receivable
xxxx
Accounts receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
Cash xxxx
Notes receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
At the end of the fiscal year, before the accounts are adjusted, Accounts Receivable
has a balance of $200,000 and Allowance for Doubtful Accounts has a credit balance of
$2,500. If the estimate of uncollectible accounts determined by aging the receivables is
$8,500, the amount of bad debt expense is:
Answer
$2,500
$6,000
$8,500
$11,000 - Answer -B
At the end of the fiscal year, Accounts Receivable has a balance of $100,000 and
Allowance for Doubtful Accounts has a balance of $7,000. The expected net realizable
value of the accounts receivable is:
Answer
$7,000
$93,000
$100,000
$107,000 - Answer -B
What is the maturity value of a 90-day, 12% note for $10,000?
Answer
$8,800
Direct write-off method - Answer -Recording bad debt expense only when an account is
determined to be worthless(used with small companies with few receivables)
Allowance method - 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 - Answer -allowance for doubtful accounts xxxx
Accounts receivable xxxx
Reinstate an account after it has been written-off? - Answer -accounts receivable xxxx
Allowance for doubtful accounts xxxx
Cash xxxx
Accounts receivable xxxx
Allowance for Doubtful Accounts
What kind of account is it? - Answer --is credited for the estimated bad debts
-contra asset account
Net realizable value - Answer --the amount that is expected to be collected or
Realized
What is the estimate of uncollectible accounts based on? 3 things . - Answer --futre
forecasts
-past experience
-industry averages
Two methods to estimate uncollectible accounts. - Answer --precent of sales method
-analysis of receivables method
How to get bad debt expense using the percentage of sales method? - Answer -credit
sales
X bad debt as a percentage of credit sales
Analysis of receivables method - 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? - Answer -face amount
X interest rate
X term / 360
What is maturity value? - Answer -amount that must be paid at the due date of the note
, How to find the maturity value? - Answer -face amount (+) interest
Journal entry for recording issuance and maturity of a note. - Answer -Notes receivable
xxxx
Accounts receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
Cash xxxx
Notes receivable xxxx
Interest receivable xxxx
Interest revenue xxxx
At the end of the fiscal year, before the accounts are adjusted, Accounts Receivable
has a balance of $200,000 and Allowance for Doubtful Accounts has a credit balance of
$2,500. If the estimate of uncollectible accounts determined by aging the receivables is
$8,500, the amount of bad debt expense is:
Answer
$2,500
$6,000
$8,500
$11,000 - Answer -B
At the end of the fiscal year, Accounts Receivable has a balance of $100,000 and
Allowance for Doubtful Accounts has a balance of $7,000. The expected net realizable
value of the accounts receivable is:
Answer
$7,000
$93,000
$100,000
$107,000 - Answer -B
What is the maturity value of a 90-day, 12% note for $10,000?
Answer
$8,800
