Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 8, Problem 2E
Determining Financial Statement Effects of
For each transaction listed in E8-1, indicate the amount and direction (+ or −) of effects on the financial statement accounts and on the overall
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Using the following key, identify the effects of the following transactions or conditions on the various financial statement elements: I = increases; D = decreases; NE = no effect.
A.credit sale
b. Collection of a portion of accounts receivable
c. Estimate of bad debts
d. Write-off of a specific uncollectible account
Recording bad debt expense under the allowance method will have what effect on the financial statements?
Select one:
a.
Profit is unchanged and total assets decrease
b.
Profit decreases and total assets is unchanged
c.
Profit is unchanged and total assets is unchanged
d.
Profit increases and total assets decrease
e.
Profit decreases and total assets decrease
Indicate whether each statement best describes the allowance (A) method or the direct write-off (DW)method. Estimates bad debts expense related to the sales recorded in that period.
Chapter 8 Solutions
Fundamentals Of Financial Accounting
Ch. 8 - What are the advantages and disadvantages of...Ch. 8 - Prob. 2QCh. 8 - Which basic accounting principles does the...Ch. 8 - Using the allowance method, is Bad Debt Expense...Ch. 8 - What is the effect of the write-off of...Ch. 8 - How does the use of calculated estimates differ...Ch. 8 - A local phone company had a customer who rang up...Ch. 8 - What is the primary difference between accounts...Ch. 8 - What are the three components of the interest...Ch. 8 - As of May 1, 2016, Krispy Kreme Doughnuts had...
Ch. 8 - Does an increase in the receivables turnover ratio...Ch. 8 - What two approaches can managers take to speed up...Ch. 8 - When customers experience economic difficulties,...Ch. 8 - (Supplement 8A) Describe how (and when) the direct...Ch. 8 - (Supplement 8A) Refer to question 7. What amounts...Ch. 8 - 1. When a company using the allowance method...Ch. 8 - 2. When using the allowance method, as Bad Debt...Ch. 8 - 3. For many years, Carefree Company has estimated...Ch. 8 - 4. Which of the following best describes the...Ch. 8 - 5. If the Allowance for Doubtful Accounts opened...Ch. 8 - 6. When an account receivable is recovered a....Ch. 8 - Prob. 7MCCh. 8 - 8. If the receivables turnover ratio decreased...Ch. 8 - Prob. 9MCCh. 8 - Prob. 10MCCh. 8 - Prob. 1MECh. 8 - Evaluating the Decision to Extend Credit Last...Ch. 8 - Reporting Accounts Receivable and Recording...Ch. 8 - Recording Recoveries Using the Allowance Method...Ch. 8 - Recording Write-Offs and Bad Debt Expense Using...Ch. 8 - Determining Financial Statement Effects of...Ch. 8 - Estimating Bad Debts Using the Percentage of...Ch. 8 - Estimating Bad Debts Using the Aging Method Assume...Ch. 8 - Recording Bad Debt Estimates Using the Two...Ch. 8 - Prob. 10MECh. 8 - Prob. 11MECh. 8 - Recording Note Receivable Transactions RecRoom...Ch. 8 - Prob. 13MECh. 8 - Determining the Effects of Credit Policy Changes...Ch. 8 - Prob. 15MECh. 8 - (Supplement 8A) Recording Write-Offs and Reporting...Ch. 8 - Recording Bad Debt Expense Estimates and...Ch. 8 - Determining Financial Statement Effects of Bad...Ch. 8 - Prob. 3ECh. 8 - Recording Write-Offs and Recoveries Prior to...Ch. 8 - Prob. 5ECh. 8 - Computing Bad Debt Expense Using Aging of Accounts...Ch. 8 - Computing Bad Debt Expense Using Aging of Accounts...Ch. 8 - Recording and Reporting Allowance for Doubtful...Ch. 8 - Recording and Determining the Effects of Write-Off...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Using Financial Statement Disclosures to Infer...Ch. 8 - Using Financial Statement Disclosures to Infer Bad...Ch. 8 - Prob. 15ECh. 8 - Analyzing and Interpreting Receivables Turnover...Ch. 8 - (Supplement 8A) Recording Write-Offs and Reporting...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Interpreting Disclosure of Allowance for Doubtful...Ch. 8 - Recording Notes Receivable Transactions Jung ...Ch. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Interpreting Disclosure of Allowance for Doubtful...Ch. 8 - Recording Notes Receivable Transactions CS...Ch. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Prob. 2PBCh. 8 - Prob. 3PBCh. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording and Reporting Credit Sales and Bad Debts...Ch. 8 - Prob. 2COPCh. 8 - Recording Daily and Adjusting Entries Using FIFO...Ch. 8 - Prob. 1SDCCh. 8 - Prob. 2SDCCh. 8 - Ethical Decision Making: A Real-Life Example You...Ch. 8 - Critical Thinking: Analyzing the Impact of Credit...Ch. 8 - Using an Aging Schedule to Estimate Bad Debts and...Ch. 8 - Accounting for Receivables and Uncollectible...
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- Which method delays recognition of bad debt until the specific customer accounts receivable is identified? A. income statement method B. balance sheet method C. direct write-off method D. allowance methodarrow_forwardWhich method of recording bad debt loss is consistent with accrual accounting? A. Allowance method B. direct write off method C. Percent of sales method D. Percent of accounts receivable methodarrow_forwardWhich of the following best describes the proper presentation of accounts receivable in the financial statements?a. Accounts Receivable plus the Allowance for DoubtfulAccounts in the asset section of the balance sheet.b. Accounts Receivable in the asset section of the balancesheet and the Allowance for Doubtful Accounts in theexpense section of the income statement.c. Accounts Receivable less Bad Debt Expense in theasset section of the balance sheet.d. Accounts Receivable less the Allowance for DoubtfulAccounts in the asset section of the balance sheet.arrow_forward
- for each of the financial statement items, identify the estimate(s) from the following (1-11) list that are required in the measurement of that item on the financial statements. For each select 3 of them. Account Receivable A. b, C, • Inventory A. b, C, Equipment A. b, C, Warranty Liability A. b, C, Sales revenue А, b, C, Revenue from long term contract b, A. Cost of good sold. C, A. C, 1. Cost to repair or replace product. 2. Cost of each item sold/held. 3. Customer default rate 4. Degree of progress fulfilling contract. 5. Pattern of benefit obtained. 6. Prices of inventory items 7. Profitability of contract 8. Rate of defect 9. Residual value at end of useful life 10. Speed of collection 11. Useful livesarrow_forwardSouthwest Pedlatrics has the following balances on December 31, 2021, before any adjustment: Accounts Recelvable = $124,000; Allowance for Uncollectible Accounts = $2,100 (debit). On December 31, 2021, Southwest estimates uncollectible accounts to be 20% of accounts recelvable. Required: 1. Record the adjusting entry for uncollectible accounts on December 31, 2021. (If no entry Is required for a particular transactlon/event, select "No Journal Entry Requlred" In the first account fleld.) View transaction list Journal entry worksheet 1 > Record the adjusting entry for Uncollectible Accounts. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2021 Record entry Clear entry View general journalarrow_forwardWhich accounting concept is applied when an entry is made for bad debts? A. Going-concern B. Materiality C. Accruel D. Historic costarrow_forward
- What information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customersarrow_forwardWhat is the impact on the accounting equation when an accounts receivable is collected? A. both sides increase B. both sides decrease C. only the Asset side changes D. the total of neither side changesarrow_forward. Which method of recording bad debt loss is consistent with accrual accounting? a. Allowance method b. Direct writeoff method c. Percent of sales method d. Percent of accounts receivable method - When the allowance method is used, the entry to record the writeoff of a specific account would Decrease both accounts receivable and the allowance b. Decrease accounts receivable and increase allowance Increase both accounts receivable and the allowance d. Increase accounts receivable and decrease the allowance 3. Under the allowance method, the journal entry to record the writeoff of a specific uncollectible account a. Affects neither net income nor working capital b. Affects neither net income nor accounts receivable c. Decreases both net income and working capital d. Decreases both net income and accounts receivable 4. Under the allowance method, the entries at the time of collection of an account previously written off would a. Decrease the allowance for doubtful accounts b. Increase net…arrow_forward
- Which following statement is a correct statement about the direct write-off method for calculating credit loss expense? A. It is in accordance with GAAP. B. It uses an allowance for credit losses account. C. It tends to understate accounts receivable on the balance sheet. D. It recognizes credit loss expense when a specific account is determined to be uncollectible.arrow_forwardIndicate whether each statement best describes the allowance (A) method or the direct write-off (DW)method. Does not predict bad debts expense.arrow_forward1. Prepare the journal entries necessary to record the above transactions and calculate the amount to be recognised in the statement of profit or loss. 2. Write up and balance off the: (i) Bad debts expense account (ii) Doubtful debts expense account (iii) Allowance for doubtful debts account.arrow_forward
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