1. When a journal entry is recorded to estimate an Allowance for Doubtful Accounts, the Accounts Receivable subsidiary ledger must be updated immediately. True False

2.Which financial statement reports Bad Debts Expense?

a. Statement of owner's equity

b.Balance sheet

c.None of these answers are correct

d.Income statement

3.Plumbing Unlimited uses the direct write-off method for uncollectible accounts. Record the following transactions in general journal form.

Aug 15 Sold merchandise on account to Maureen Townsend for $3,500. The cost to Plumbing Unlimited for the merchandise is $1,000.

Sept 15 Received $1,200 cash payment from Maureen Townsend on her account.

Sept 30 Received $800 cash payment from Maureen Townsend on her account.

Oct 15 Wrote off the balance due on Maureen's account as uncollectible.

4.When a specific account receivable is written off as uncollectible under the direct write off method, it decreases the Allowance for Doubtful Accounts.True False

5.If there were an uncollectible write off reversal in the same year as the write off, Bad Debts Recovered would be used rather than Bad Debts Expense.True False

6. Bad Debts Recovered is a revenue account usually reported in Other Income on the Income Statement.

7.When an account receivable is written off as uncollectible using the direct write off method, it increases Bad Debts Expense. True False

8. To record receipt of money after an account has been written off in the previous year, using the direct method you would need to

a. credit Bad Debts Recovered.

b. debit the allowance account.

c. credit cash.

d. credit Sales.

9. If the direct write-off method is used, the debit account to write off an uncollectible is

a. Allowance for Doubtful Accounts.

b. Bad Debt Expense.

c. Sales.

d. Accounts Receivable.

10. City Tours collected $190 on an account that had been directly written off the previous year. The journal entry to record the transaction would include

a. a debit to Bad Debts Recovered.

b. a credit to Bad Debts Recovered.

c. a debit to Allowance for Doubtful Accounts.

d. a credit to Bad Debts Expense.