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Using the percentage-of-sales method, you estimate that total uncollectible accounts are $4,500. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $1,400. The amount of the adjusting entry is:
A) $5,900
B) $4,500
C) $3,100
D) $1,400
22) Using the percentage-of-sales method, you estimate that total uncollectible accounts are $4,500. The Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1,400. The amount of the adjusting entry is:
A) $1,400
B) $3,100
C) $4,500
D) $5,900
23) Under the allowance method, if bad debt write-offs during the year exceed the allowance amount, the balance in Allowance for Uncollectible Accounts at year end prior to adjustment:
A) should be deducted from Accounts Receivable
B) will be zero
C) will be a debit
D) should be adjusted by debiting it to bring the balance back to zero
24) Using the aging-of-accounts-receivable method to estimate uncollectible receivables, CMU Corporation estimates that $3,750 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a credit balance of $600. Uncollectible account expense to be reported on the income statement is:
A) $4,350
B) $3,750
C) $3,150
D) $600
25) Smart-T Corporation uses the aging-of-accounts-receivable method to estimate uncollectible receivables. At year end Smart-T estimates that $4,750 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a credit balance of $200. Uncollectible account expense to be reported on the income statement is:
A) $4,750
B) $4,950
C) $4,550
D) $200
26) Using the aging-of-accounts-receivable method to estimate uncollectible receivables, Records Management Corp. estimates that $8,000 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a debit balance of $2,000. Uncollectible account expense to be reported on the income statement is:
A) $10,000
B) $8,000
C) $6,000
D) $2,000
27) The direct write-off method does not meet the requirements of the:
A) matching principle
B) revenue recognition principle
C) full disclosure principle
D) historical cost principle
28) Lifecycle Management Corporation uses the percentage-of-sales method to estimate uncollectible receivables. Net credit sales for the current year amount to $2,000,000 and management estimates 5% will be uncollectible. Allowance for doubtful accounts prior to adjustment has a credit balance of $10,000. The amount of expense reported on the income statement will be:
A) $110,000
B) $100,000
C) $90,000
D) $10,000
29) When an account is written off using the direct write-off method, total assets will:
A) remain the same
B) increase
C) decrease
D) cannot be determined
30) Livelink Incorporated use the percentage-of-sales method to estimate uncollectible receivables. Net credit sales for the current year amount to $1,000,000 and management estimates 3% will be uncollectible. Allowance for Doubtful Accounts prior to adjustment has a debit balance of $1,900. The amount of expense reported on the income statement will be:
A) $31,900
B) $30,000
C) $28,100
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