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Answer: A
Explanation: The adjusting entry will decrease assets by increasing the contra-asset allowance
for doubtful accounts and will increase uncollectible accounts expense, which decreases equity.
Difficulty: 1 Easy
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Analyze
AACSB: Analytical Thinking
AICPA: FN Measurement; BB Critical Thinking
2) On January 1, Year 2, the Accounts Receivable balance was $37,000 and the balance in the
Allowance for Doubtful Accounts was $2,800. On January 15, Year 2, an $800 uncollectible
account was written-off. The net realizable value of accounts receivable immediately after the
write-off is:
A) $36,200.
B) $33,400.
C) $35,000.
D) $34,200.
Answer: D
Explanation: $37,000 – $800 = $36,200 accounts receivable balance after the write-off;
$2,800 – $800 = $2,000 allowance balance after the write-off; $36,200 – $2,000 = $34,200 net
realizable value after the write-off.
Difficulty: 3 Hard
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Apply
AACSB: Knowledge Application
AICPA: FN Measurement; BB Critical Thinking
1
Copyright ©2018 McGraw-Hill
2
Copyright ©2018 McGraw-Hill
3) On January 1, Year 2, Grande Company had a $16,000 balance in the Accounts Receivable
account and a zero balance in the Allowance for Doubtful Accounts account. During Year 2,
Grande provided $104,000 of service on account. The company collected $97,000 cash from
accounts receivable. Uncollectible accounts are estimated to be 2% of sales on account.
Based on this information, the amount of cash flow from operating activities that would appear
on the Year 2 statement of cash flows is:
A) $97,000.
B) $104,000.
C) $89,520.
D) $95,060.
Answer: A
Explanation: $97,000 cash collected from accounts receivable is a cash inflow for operating
activities.
Difficulty: 2 Medium
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Analyze
AACSB: Analytical Thinking
AICPA: FN Measurement; BB Critical Thinking
4) On January 1, Year 2, Grande Company had a $16,000 balance in the Accounts Receivable
account and a zero balance in the Allowance for Doubtful Accounts account. During Year 2,
Grande provided $104,000 of service on account. The company collected $97,000 cash from
accounts receivable. Uncollectible accounts are estimated to be 2% of sales on account.
The amount of uncollectible accounts expense recognized on the Year 2 income statement is:
A) $320.
B) $1,000.
C) $2,080.
D) $1,940.
Answer: C
Explanation: $104,000 sales on account × 2% = $2,080 uncollectible accounts expense
Difficulty: 2 Medium
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Apply
AACSB: Knowledge Application
AICPA: FN Measurement; BB Critical Thinking
3
Copyright ©2018 McGraw-Hill
5) The Miller Company earned $190,000 of revenue on account during Year 2. There was no
beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller
collected $136,000 of cash from its receivables accounts. The company estimates that it will be
unable to collect 3% of its sales on account.
The amount of uncollectible accounts expense recognized on the Year 2 income statement was:
A) $5,700.
B) $1,320.
C) $4,080.
D) $54,000.
Answer: A
Explanation: $190,000 revenue on account × 3% = $5,700
Difficulty: 2 Medium
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Apply
AACSB: Knowledge Application
AICPA: FN Measurement; BB Critical Thinking
6) The Miller Company earned $190,000 of revenue on account during Year 2. There was no
beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller
collected $136,000 of cash from its receivables accounts. The company estimates that it will be
unable to collect 3% of its sales on account.
The net realizable value of Miller's receivables at the end of Year 2 was:
A) $54,000.
B) $49,920.
C) $59,700.
D) $48,300.
Answer: D
Explanation: $0 beginning balance + $190,000 revenue on account – $136,000 collections =
$54,000 ending accounts receivable balance; $0 beginning balance + $5,700 uncollectible
accounts expense – $0 write-offs = $5,700 ending allowance for doubtful accounts balance;
$54,000 – $5,700 = $48,300 net realizable value
Difficulty: 2 Medium
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Apply
AACSB: Knowledge Application
AICPA: FN Measurement; BB Critical Thinking
4
Copyright ©2018 McGraw-Hill
7) The balance in Accounts Receivable at the beginning of the period amounted to $16,000.
During the period $64,000 of credit sales were made to customers. If the ending balance in
Accounts Receivable amounted to $10,000, and uncollectible accounts expense amounted to
$4,000, then the amount of cash inflow from customers that would appear in the operating
activities section of the cash flow statement would be:
A) $66,000.
B) $64,000.
C) $80,000.
D) None of these answers are correct.
Answer: D
Explanation: $16,000 beginning accounts receivable balance + $64,000 credit sales – $10,000
ending accounts receivable balance = $70,000 cash collected from customers; The $4,000 in
uncollectible accounts expense does not affect accounts receivable, and does not affect cash
flows.
Difficulty: 3 Hard
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Analyze
AACSB: Analytical Thinking
AICPA: FN Measurement; BB Critical Thinking
8) On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for
Doubtful Accounts carried balances of $31,000 and $500, respectively. During the year Kincaid
reported $72,500 of credit sales. Kincaid wrote off $550 of receivables as uncollectible in Year
2. Cash collections of receivables amounted to $74,550. Kincaid estimates that it will be unable
to collect one percent (1%) of credit sales.
The amount of uncollectible accounts expense recognized in the Year 2 income statement will
be:
A) $310.
B) $725.
C) $745.
D) $550.
Answer: B
Explanation: $72,500 credit sales × 1% = $725 uncollectible accounts expense
Difficulty: 2 Medium
Topic: Estimating Uncollectible Accounts Expense Using the Percent of Revenue Method
Learning Objective: 05-01 Use the percent of revenue method to account for uncollectible accounts expense.
Bloom's: Apply
AACSB: Knowledge Application
AICPA: FN Measurement; BB Critical Thinking
5
Copyright ©2018 McGraw-Hill
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Language: English
Chattanooga Campaign.
A Paper Read at the Reunion of Company B,
Fortieth Ohio Volunteer Infantry, at
Xenia, O., August 22, 1894,
BY
SERGEANT ISAAC C. DOAN.
RICHMOND, IND.:
PRINTED AT J. M. COE’S PRINTERY,
1894.
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