Question

8. When an customer account is closed due to nonpayment, the account to be debited is:

a. Cash                                     c. Allowance for Uncollectible Accounts

b. Accounts Receivable              d. Uncollectible Accounts Expense

9. Johnson Co. uses the Aging Method to estimate uncollectible Accounts. An aging schedule shows that $60,000 in accounts are estimated to be uncollectible. The Allowance for Uncollectible Accounts already has a $5,000 credit balance. For what amount should the account be adjusted (credited)?

a. $65,000                    c. $60,000

b. $70,000                    d. $55,000

10. Jacobs Co. uses the Percentage of Credit Sales Method to estimate uncollectible accounts.  Past experience indicates that about 2% of credit sales will become uncollectible. Credit sales for the current month are $400,000.  The Allowance for Uncollectible Accounts already has a $3,000 credit balance.  For what amount should the account be adjusted (credited)?

a. $83,000                    c. $8,000

b. $5,000                      d. $11,000

Answer 1

Q.8	Correct Option C i.e. Allowance for Uncollectible Accounts
	Following entry is journalised
	Accounts Title and Explanation	Debit	Credit
	Allowance for Uncollectile accounts	xxx
	Accounts Receivable		xxx
	(To record accounts writen off)
Q.9	Correct Option D i.e. $55000
	Beginning Balance of allowance account	5,000	(Credit)
	Required endning balance if allowance account	60,000
	Adjustment amount	55,000
Q.10	Correct Option C i.e. $8000
	Sales amount	400,000
	Estimated Bad debt Expense	8,000	(400000*2%)
	Following entry is journalised
	Accounts Title and Explanation	Debit	Credit
	Bad Debt Expense	8000
	Allowance for Uncollectile accounts	8000
	(To record bad debt expense)