Solved by verified expert :Question 1
Under the direct write-off method of accounting for
the allowance account is increased for the actual amount of
bad debt at the time of write-off.
bad debt expense is always recorded in the period in which
the revenue was recorded.
balance sheet relationships are emphasized.
a specific account receivable is decreased for the actual
amount of bad debt at the time of write-off.
The net amount expected to be received in cash from
receivables is termed the
cash realizable value.
gross cash value.
When a note is accepted to settle an open account, Notes
Receivable is debited for the note’s
net realizable value.
face value plus interest.
Short-term notes receivables
use the same estimations and computations as accounts
receivable to determine cash realizable value.
present the same valuation problems as long-term notes
are reported at their gross realizable value.
have a related allowance account called Allowance for
Doubtful Notes Receivable.
Bad Debt Expense is considered
avoidable unless there is a recession.
an internal control weakness.
an avoidable cost in doing business on a credit basis.
a necessary risk of doing business on a credit basis.
Schwartzman Co., makes a credit card sale to a customer for
$800. The credit card sale has a grace period of 30 days and then an interest
charge of 1.5% per month is added to the balance. If the unpaid balance on the
above sale is $640 at the end of the grace period, the interest charge is
A company has net credit sales of $750,000 for the year and
it estimates that uncollectible accounts will be 2% of sales. If Allowance for
Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its
balance after adjustment will be a credit of
A 60-day note receivable dated July 13 has a maturity date
Kill Corporation’s unadjusted trial balance includes the
following balances (assume normal balances):
Allowance for Doubtful Accounts 15,000
Bad debts are estimated to be 6% of outstanding receivables.
What amount of bad debt expense will the company record?
Lifetime sells softball equipment. On November 14, they
shipped $3,000 worth of softball uniforms to Palos Middle School, terms 2/10,
n/30. On November 21, they received an order from Tinley High School for $1,800
worth of custom printed bats to be produced in December. On November 30, Palos
Middle School returned $300 of defective merchandise. Lifetime has received no
payments from either school as of month end. What amount will be recognized as
net accounts receivable on the balance sheet as of November 30?