Question

Gross Accounts Receivable is $10,000. Allowance for Doubtful Accounts has a credit balance of $200. Net sales for the year are $150,000. In the past, 2% of sales had proved uncollectible. What would be the adjusted balance of the Allowance account under the income statement approach?
$2,800

$1,400

$3,000

$3,200

Which type of account is an Allowance for Doubtful Accounts?
Question 10 options:

Asset

Contra-asset

Contra-revenue

Revenue

Fit City estimates it will collect $2,300 of the $2,425 owed by customers. The difference of $125 represents the
Question 13 options:

Gross Accounts Receivable.

Value of the Current Unpaid Receivables.

Allowance for Doubtful Accounts.

Net Realizable Value.

The beginning Merchandise Inventory account appears in the _______ on the worksheet.
Question 15 options:

adjustment column

All of the above

trial balance and the balance sheet columns

trial balance and adjustment columns

Answer 1

1. $3,000

2. Contra-revenue

3. Value of the Current Unpaid Receivables.

4. Trial balance and the balance sheet columns

Answer 2

The answer to each section of the question is below:

The Allowance for Doubtful Accounts will have a balance of $3,000. This is determined because net sales are $150,000 and 2% of past sales are uncollectible. 150,000 x .02 = $3,000, which would be the amount of Allowance that the company would want on the books.

The Allowance for Doubtful Accounts is a contra-asset account because it offsets the asset account of Accounts Receivable.

The correct answer is Allowance for Doubtful Accounts.

The beginneing Merchandise Inventory account appears in both the trial balance and balance sheet columns.