ACC 291T Wk 4 – Practice: Connect Knowledge Check (2021.7 New)

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. On July 10, the entry or entries Gideon makes to record the recovery of the bad debt is:

Multiple Choice

Accounts Receivable—A. Hopkins       2,000

Bad debts expense       2,000

Cash       2,000

Accounts Receivable—A. Hopkins            2,000

Cash       2,000

Bad debts expense       2,000

Accounts Receivable—A. Hopkins       2,000

Allowance for Doubtful Accounts      2,000

Cash       2,000

Accounts Receivable—A. Hopkins            2,000

Allowance for Doubtful Accounts 2,000

Accounts Receivable—A. Hopkinse           2,000

Accounts Receivable—A. Hopkins       2,000

Cash            2,000

Cash       2,000

Accounts Receivable—A. Hopkins            2,000

Separate accounts receivable information for each customer is important because it reveals all of the following except:

Multiple Choice

When the customer intends to pay outstanding balances.

The basis for sending bills to customers.

How much each customer still owes.

How much each customer has paid.

How much each customer has purchased on credit.

A 90-day note issued on April 10 matures on:

Multiple Choice

July 12.

July 9.

July 10.

July 11.

July 13.

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is: (Use 360 days a year.)

Multiple Choice

$75.00.

$87.50.

$150.00.

$50.00.

$37.50.

On February 1, a customer’s account balance of $2,300 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method?

Multiple Choice

Debit Allowance for Doubtful Accounts $2,300; credit Bad Debts Expense $2,300.

Debit Bad Debts Expense $2,300; credit Allowance for Doubtful Accounts $2,300.

Debit Accounts Receivable $250; credit Allowance for Doubtful Accounts $2,300.

Debit Allowance for Doubtful Accounts $2,300; credit Accounts Receivable $2,300.

Debit Bad Debts Expense $2,300; credit Accounts Receivable $2,300.

If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in:

Multiple Choice

A reduction in equity.

An increase in the expenses of the current period.

No effect on the expenses of the current period.

An increase in current assets.

A reduction in current liabilities.

Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on January 15 of the next year when the note is paid? (Assume reversing entries are not made.) (Use 360 days a year.)

Multiple Choice

Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20; credit Notes Receivable $4,800.

Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100; credit Notes Receivable $4,800.

Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920.

Debit Cash $4,920; credit Interest Revenue $120; credit Notes Receivable $4,800.

Debit Cash $4,920; credit Notes Receivable $4,920.

Which of the following is not true regarding a bank (or third party) credit card expense?

Multiple Choice

Credit card expense is not recorded by the seller.

Credit card expense is a fee the seller pays for services provided by the card company.

Credit card expense may be classified as a selling expense.

Credit card expense may be classified as an administrative expense.

Credit card expense may be classified as a “discount” deducted from sales to get net sales.

The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts:

Accounts receivable       $     435,000   Debit

Allowance for Doubtful Accounts      1,250      Credit

Net Sales      2,100,000       Credit

________________________________________

All sales are made on credit. Based on past experience, the company estimates 3.5% of ending account receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Multiple Choice

Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350.

Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225.

Debit Bad Debts Expense $16,475; credit Allowance for Doubtful Accounts $16,475.

Debit Bad Debts Expense $13,975; credit Allowance for Doubtful Accounts $13,975.

Debit Bad Debts Expense $17,350; credit Allowance for Doubtful Accounts $17,350.

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

Multiple Choice

$2,800

• $4,400

$3,600

• $3,632
• $3,568