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Uncollectible Accounts

1) If the Allowance for uncollectible Accounts has a credit balance of $900 at the end of the current year(prior to adjustment). An analysis of the accounts in the customers Ledger indicates uncollectible accounts of $16,000. The adjusting entry would require a debit to:

A) uncollectible account expense for $15,100

B) uncollectible account expense for $16,900

C) allowance for uncollectible accounts for $15,100

D) allowance for uncollectible accounts for $16,900

2) The inventory account shows an ending balance of $20,800. An actual count of inventory reveals $21,200. of inventory on hand. The adjusting entries involves

A) credit to inventory for $20,500

B) credit to cost of goods sold for $20,100

C) debit to cost of goods sold for $400

D) debit to inventory for $400

3) Which of the following is recorded in the sales journal?

A) return of merchandise purchased for cash

B) sale of merchandise for cash

C) sale of merchandise on account

D) return of merchandise purchased on account

4) The following data are available for Caroline's Dress shop October:

Book balance, October 31st $5,575

Outstanding checks $584.00

Deposits in transit $2,500

Service charges $75.00

Interest revenue $25.00

What is the adjusted book balance on October 31st for the shop based on the above data.

5) Uncollectible account expense is a Contra Asset account.
True or False

6)The entry to write off an uncollectible account using the direct write off method includes a debit to uncollectible account expense.
True or False

7) If an individuals account was written off last year. He owed City Company $5,000. Using the allowance method, the journal entry to receive the cash after his account has been reinstated involves.

A) a debit to the individuals account receivable and a credit to allowance for uncollectible accounts.

B) a debit to allowance for uncollectible accounts and a credit to the individuals account receivable

C) a debit to cash and a credit to uncollectible account expense.

D) a debit to cash and a credit to the individuals account receivable.

Solution Preview

1) If the Allowance for Uncollectible Accounts has a credit balance of $900 at the end of the current year (prior to adjustment). An analysis of the accounts in the customers Ledger indicates uncollectible accounts of $16,000. The adjusting entry would require a debit to:

A) uncollectible account expense for $15,100

B) uncollectible account expense for $16,900

C) allowance for uncollectible accounts for $15,100

D) allowance for uncollectible accounts for $16,900

Answer: A) uncollectible account expense for $15,100

As the Allowance for Uncollectible Accounts has a credit balance of $900 at the end of the current year and that it is expected that the uncollectible accounts will be $16,000, then we should increase the balance for the Allowance for Uncollectible Accounts to $16,000 by debiting uncollectible account expense for $15,100 and crediting the Allowance for Uncollectible Account for $15,100.

2) The inventory account shows an ending balance of $20,800. An actual count of inventory reveals $21,200 of inventory on hand. The adjusting entries involves

A) credit to inventory for $20,500

B) ...

Solution Summary

This solution is comprised of a detailed explanation to answer the questions regarding the uncollectible accounts.

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