Majestic company has a credit balance of the allowance for doubtful account that exceeds the amount of a bad debt being written off, the journal entry to record the write off results in: a. A reduction in current liabilities b. No effect on the bad debts expenses of the current period O C. An increase in current assets d. An increase in the expenses of the current period

Majestic company has a credit balance of the allowance for doubtful account that exceeds the amount of a bad debt being written off, the journal entry to record the write off results in: a. A reduction in current liabilities b. No effect on the bad debts expenses of the current period O C. An increase in current assets d. An increase in the expenses of the current period

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 9MC: Which method delays recognition of bad debt until the specific customer accounts receivable is...

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Each time an account is written off under the direct write-off method, Bad Debt Expense is debited.
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 method
Which of the following estimation methods considers the amount of time past due when computing bad debt? A. balance sheet method B. direct write-off method C. income statement method D. balance sheet aging of receivables method
Which of the following statements regarding the allowance method is talse? Multiple Choice The allowance method estimates bad debts expense at the end of each accounting period and records it w The allowance method does not record bad debt expense until a customer's account receivable is determir
a. Estimate the balance of the Allowance for Doubtful Accounts using aging of accounts receivable. b. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $3,600 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $100 debit.
If the Allowance for Doubtful Account has a Debit balance at the end of the period, then more 'actual bad debt' was recognized than 'estimated' O Net Income will be less than zero O estimated bad debt for the next period will not be necessary O AR balance will be zero 763C0
Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is recorded Oa. when a credit sale is past due O b. whenever a predetermined amount of credit sales has been made Oc. when an account is determined to be worthless O d. at the end of each accounting period
The 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 off
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
If a company uses the direct write-off method of accounting for bad debts,a. it will report accounts receivable on the balance sheet at their net realizable value.b. it is applying the matching principle.c. it will reduce the Accounts Receivable account at the end of the accounting period for estimated uncollectible accounts.d. it will record bad debt expense only when an account is determined to be uncollectible.
If a company uses the allowance method of accounting for bad debts, which one of the following statements is true?a. It violates the matching principle. b. It will record bad debts only when an account is determined to be uncollectible. c. It will reduce the accounts receivable at the end of the accounting period for estimated uncollectible accounts. d. It will report accounts receivable in the balance sheet at their net realizable value.
When using the percentage of sales method to estimate the amount of bad debt expense for uncollectible accounts, what effect would a debit balance in Allowance for Doubtful Accounts have on the current period's adjusting entry? a.A debit balance would increase the amount of the current period's adjusting entry. b.A debit balance would decrease the amount of the current period's adjusting entry. c.The balance in Allowance for Doubtful Accounts would be ignored when making the current period's adjusting entry. d.A debit balance would be carried over to the next period.