Chapter 9

Question 1

Accounts Receivable

Answer 1

Amounts due from customers for credit sales

Question 2

Direct Write-Off Method

Answer 2

records the loss from an uncollectible account receivable when it is determined to be uncollectible; no attempt is made to predict bad debts expense

Question 3

Recovering Bad Debt (Direct Write-Off)

Answer 3

Occurs when an account that was written off directly to pad debt is collected in full

Question 4

Allowance Method

Answer 4

matches the estimated loss from uncollectible accounts receivable against sales they helped produce
1. records estimated bad debts expense in the period when the related sales are recorded
2. reports accounts receivable on the balance sheet at the estimated amount to be collected

Question 5

Writing Off Bad Debt (Allowance Method)

Answer 5

When accounts become uncollectible, they are written off against the Allowance for Doubtful Accounts

Question 6

Recovering Bad Debt (Allowance Method)

Answer 6

Question 7

Percent of Sales Method (Estimating Bad Debts)

Answer 7

Assumes that a percent of credit sales for the period is uncollectible

Question 8

Percent of Receivables Method (Estimating Bad Debts)

Answer 8

Assumes that a percent of a company’s receivables is uncollectible; total receivables is multiplied by this percent to get the estimated uncollectible amount as reported in the balance sheet as Allowance for Doubtful accounts

Question 9

Aging of Receivables Method (Estimating Bad Debts)

Answer 9

Applied like the percent of receivables method excepts that several percentages are used to estimate the allowance. Each receivable is classified by how long it is past its due date. Then estimates of uncollectible amounts are made assuming that the longer an amount is past due, the more likely it is to be uncollectible