Eatable Company, a VAT-registered entity is engaged in the following transact. Accounts Receivable -Financial assets that represent a contractual right to receive cash or another financial asset from. The adjusting entry to elimin.
Answer Key: 1. When examining the accounts of Groot Company, it is ascertaine. The direct write-off method for uncollectible accounts does not provide for the matching of current revenues with related expenses. The use of the direct write-off method is acceptable under generally accepted accounting principles. Doubtful accounts expense is normally reported as a deduction from sales in the income statement.
The entry to write off an uncollectible account under the allowance method is a debit to Doubtful Accounts Expense and a credit to Accounts Receivable. The method of estimating uncollectible accounts expense based on the accounts receivable balance emphasizes the determination of the net realizable value of the receivables. When estimating collectability based on an analysis of the accounts receivable balance, any existing balance in the allowance for doubtful accounts is ignored.
The aging method of estimating doubtful accounts is a variation of the percentage of ending receivables method. The "list" sales price less any trade discount is the invoice amount. Sales discounts are normally reported as selling expenses. TRUE 2. Which of the following is incorrect? The operating cycle always is one year in duration. The operating cycle sometimes is longer than one year in duration.
The operating cycle sometimes is shorter than one year in duration. The operating cycle is a concept applicable both to manufacturing and retailing enterprises. The category "trade receivables" includes a. Which of the following should be recorded in Accounts Receivable? Receivables from officers b. Receivables from subsidiaries c. Dividends receivable d. None of these 4. When the direct write-off method of recognizing bad debt expense is used, the entry to write off a specific customer account would a.
Infer the journal entries that explain the accounts receivable and the related allowance accounts activity during the year. The income statement was not adjusted for bad debt expense. A large percentage of sales were to 3 customers, one of which, Litzenberger Supply is in questionable financial health, although still in business.
P continued Required: a. Adjust the financial statements of Hadley Company to reflect a more conservative reporting with respect to bad debts, i.
Recompute net income. Why would auditors probably require that Hadley choose the more conservative reporting?
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What will the balance of Allowance for Uncollectible Accounts be after each adjustment? Why are the results different? Which method is likely to be more reliable? Omega Company's management uses two methods of estimating uncollectible accounts expense: the percentage of net sales method and the accounts receivable aging method.
Aging of AR Emory Company uses the accounts receivable aging method to estimate uncollectible accounts. At the end of year December 31, , a junior accountant for Emory Company was preparing an aging analysis of accounts receivable. Compute the end-of-year balances before adjustments of Accounts Receivable and Allowance for Uncollectible Accounts. Prepare an analysis computing the estimated uncollectible accounts.
Calculate Garcia Company's estimated uncollectible accounts expense for the year round the amount to the nearest whole dollar. What role do estimates play in applying the aging analysis? What factors might affect these estimates? The rest of the amount due from Hegerman had to be written off as uncollectible. Using T accounts, show the beginning balances and the effects of the Hegerman transactions on Accounts Receivable and Allowance for Uncollectible Accounts. What is the amount of net accounts receivable before and after the write-off?
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