41. One of the weaknesses of the direct write-off method is that it a understate

Question

41. One of the weaknesses of the direct write-off method is that it a understates accounts receivable on the balance sheet b. violates the matching principle . is too difficult to use for many companies d. is based on estimates 2.To record stimated uncollectble ecelvables using the allowance method,the adjusting entry would be a a. debit to Bad Debs Expense and a credit to Allowance for Doubtful Accounts. b. debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts. e. debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. d. debit to Loss on Credit Sales and a credit to Accounts Receivable 43. After the accounts are adjusted and closed at the end of the fiscal year, Accounts Accounts has a Receivable has a balance of $460,000 and Allowance for Doubtful balance of $30,000. What is the net realizable value of the accounts receivable? a. $30,000 b. $430,000 e. $460,000 d. $490,000 44. Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit a. Bad Debt Expense and credit Accounts Receivable b. Bad Debt Expense and credit Allowance for Doubtful Accounts c. Allowance for Doubtful Accounts and credit Accounts Receivable d. Accounts receivable and credit Allowance for Doubtful Accounts 4S. When using the allowance method to estimate uncollectible accounts receivable based on an analysis of receivables shows that $790 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $120. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of a. $120 b. $790 c. $670 d. $910 A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable, 46. a. total current assets are reduced b. total expenses for the period are increased c. total current assets are reduced and total expenses are increased d. there is no effect on total current assets or total expenses To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a 47.

Explanation / Answer

Answer summery from question 41 to question 44

Explanation

(41)

Matching principal requires a business to record revenue and their expenses in same period but in this method we charge w/off amount as a bad debts expenses and this might be occour after the sales recorded, so it voilates the matching principal of GAAP.

(42)

This method to account bad debts expenses following GAAP matching principal. in this method we estimate the uncollectible amount at end of the year and write off this as bad debts expenses by creating a reserve in balance sheet by crediting the accounts of allowance for doubtful debts.

Bad Debts A/c Debit

allowance for doubtful accounts Credit

(43)

Accounts receivables represents the gross balance of A/c receivables and alowance for doubtful account represents the estimate reserve for bad debts so net realizable value of account receivable will be 460000 - 30000 = 430000

so option b is correct.

(44)

we have to clear reserve of doubt full accounts from balance sheet by debiting this account and have to clear account receivable by crediting it. so we have to credit a/c receivable and debit allowance for doubtful accounts. so option c is correct.

As per chegg policy, in situation of multiple questions asked, we have to require to answer first four (4) questions, so we have provided solutions from question 41 to question 44.

Question Answer 41 B 42 A 43 B 44 C

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