1. When using the direct write-off method of accounting for uncollectible receivables, the account allowance for doubtful accounts is debited when a specific account is determined to be uncollectible? True or False
2. At the end of a period (before Adjustment), Allowance for doubtful accounts has a debit balance of $500. Net Credit sales for the period totaled $800,000. If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjusting entry is $8,500? True or False?
3. The Balance in the allowance for doubtful accounts account at the end of the year includes that total of all accounts written-off since the beginning year. True or False
4. If a promissory note is dishonored, the payee should still record interest revenue? True or False
5. When a note is written to settle an open account , no entry is necessary. True or False
6. The balance of the allowance for doubtful accounts is added to accounts receivable on the balance sheet. True or False?
7. Under the allowance method of accounting for uncollectible receivables, writting 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.
8. When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal?
a. Bad Debt Expense 500
Allowance for doubtful accounts 500
b. Bad Debt Expense 500
Accounts Receivable - Bob Smith 500
c. Cash 300
Allowsance for doubtful accounts 200
Accounts Receivable - Bob Smith 500
d. Cash 500
Accounts Receivable - Bob Smith 500