14 The account Allowance for Uncollestible Accounts is neces

14 The account Allowance for Uncollestible Accounts is necessary because A management should know how many credit losses have boen sustained over the years uncollectible accounts expense. ix is no·pmaade to predict spwincally Il not be collected e. uncollected accounts that are written off must be accumolated in a separate account d a liability results wihen a credit sale is made IS. The general lexdger account for Accounts Receivable shows a debit balance of $25,000. Allowance for Uncollectible Accounts has a credit balance of $1,500. Net sales for the year were $250,000. la the past, 3 perceet of net sales have proved uncellectible, and an aging of accounts receivable resulted in an estimate of 510,000 in uncollectible accounts rece Uhing the accounts receivable aging method, the Uncollectible Accounts Expense would be debited or a $8,500. b. $11,s00. ?. $10,750. d. $10,000. 16. A liability is recognized when a. the exact amount of the liability is known. b. an obligation has arisen. e. the exact due date is known d. it is paid for. 17. Sales Tax Payable is an example of a(n) a definitely determinable liability. b. estimated liability c. trade liability d. contingent liability 18. Use this information to answer the following question. The transactions below pertain to Broyer Company, whose fiscal year ends September 30. Sept. 10 Received cash for a 90-day, 12 percent, $25,000 note payable. Interest is in addition to the face value. Made end-of-year adjusting entry to accrue interest expense. 30 The September 30 adjusting entry, rounded to the nearest dollar, to accrue the interest expense on the note payable would include a a. b. c. d. debit to Interest Expense for $164. credit to Notes Payable for $164. credit to Cash for $164. credit to Interest Expense for $164. UIBE ACC212 Financial Accounting/Geyer/Summer 2018

Solution

Q14. Answer is b. When recording uncollectible accounts expense, it is not possible to predict specifically which account will not be collected. Q15. Answer is a. $ 8500. Explanation: Allowance required balance 10000 Less: Actual credit balance 1500 Expense to be reocgnized 8500 Q16. Answer is b. An obligation has arisen. Q17. Answer is a. Definite determinable liability. Q18. Answer is a. debit interest expense $164 Explanation: Journal entry for interst adjustment: Interest expense Account Dr.    Interest payable Account