1) Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a
A. credit to Bad Debt Expense B. credit to Accounts Receivable C. debit to Allowance for Doubtful Accounts D. debit to Accounts Receivable
2) The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?:
A. debit Allowance for Doubtful Accounts; credit Accounts Receivable
B. debit Sales Returns and Allowance, credit Accounts Receivable
C. debit Bad Debt Expense; credit Allowance for Doubtful Accounts
D. debit Bad Debt Expense; credit Accounts Receivable
3) Two methods of accounting for uncollectible accounts are the
A. direct write-off method and the allowance method.
B. allowance method and the accrual method.
C. allowance method and the net realizable method.
D. direct write-off method and the accrual method.
4) A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is
A. debit Cash, $6,120; credit Notes Receivable, $6,120
B. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Receivable, $120
C. debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
D. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Revenue, $120
5) Which of the following should be included in the acquisition cost of a piece of equipment?
A. transportation costs
B. installation costs
C. testing costs prior to placing the equipment into production
D. all are correct
6) You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to
A. debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
B. debit Bad Debt Expense and credit Accounts Receivable.
C. debit Allowance for Doubtful Accounts and credit Accounts Receivable.
D. debit Allowance for Doubtful Accounts and credit Bad Debt Expense
7) Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account.
A. affects only income statement accounts.
B. is not an acceptable practice.
C. affects only balance sheet accounts.
D. affects both balance sheet and income statement accounts.