Financial Accounting and Reporting Test 2

Financial Accounting and Reporting Test
2
Journal entry to Record Sales on Credit - correct answer-Dr Accounts Receivable
Cr Sales Revenue

Journal entry to Record Estimate of Bad Debt - correct answer-Dr Bad Debt Expense
Cr Allowance for Doubtful Accounts

Journal entry to Write-off a Specific Bad Account - correct answer-Dr Allowance for Doubtful
Accounts
Cr Accounts Receivable (specific)

During fiscal quarter, firm ABC had 100,000 in sales, 40% were on credit - correct answer-Dr
Cash 60,000
Dr Accounts Receivable 40,000
Cr Revenue 100,000

Firm ABC expects to collect 90% its outstanding accounts - correct answer-Dr Bad Debt
Expense 4,000
Cr Allowance for Uncollectables 4,000

During following quarter, ABC writes off 2,000 in uncollectables - correct answer-Dr
Allowance for Uncollectables 2,000
Cr Accounts Receivable 2,000

ABC later able to recover 1,000 of previously written off accounts - correct answer-Dr
Accounts Receivable 1,000
Cr Allowance for Uncollectables
Dr Cash 1,000
Cr Accounts Receivable 1,000

ABC also collects 10,000 of its outstanding accounts - correct answer-Dr Cash 10,000
Cr Accounts Receivable 10,000

Willy Wonka has credit sales 1,000 - correct answer-Dr Accounts Receivable 1,000
Cr Revenues 1,000

Willy Wonka actual return of 50 (of credit sales) - correct answer-Dr Sales Returns 50
Cr Accounts Receivable 50

End of year, Willy Wonka estimates an additional 100 of returns (from credit sales) - correct
answer-Dr Sales Returns 100
Cr Allowance for Returns 100