Q$1$ The allowance for bad debts is the portion of $($accounts receivable $/$ sales revenue$)$ that is

estimated as uncollectible and is reported on the balance sheet as a $($current asset $/$ noncurrent

asset $/$ current liability $/$ noncurrent liability $/$ stockholders$$ equity$).$

Q$2$ The total amount customers owe the company on account on December $31,$ Year $5$ is $$\_\_\_\_\_\_\_\_\_\_.$

Of this amount, $$\_\_\_\_\_\_\_\_\_\_$ is estimated to be uncollectible and $$\_\_\_\_\_\_\_\_\_\_$ is estimated to be

collectible. As a result of the financial statement information listed above, total assets will increase

by $$\_\_\_\_\_\_\_\_\_\_.$

Q$3$ Bad debt expense is the portion of $($accounts receivable $/$ sales revenue$)$ that is estimated as

uncollectible and reported as a$($n$)($operating $/$nonoperating$)$ expenses on a multi$-$step income

statement. Above, sales revenue earned during Year $5$ totals $$\_\_\_\_\_\_\_\_\_\_,$ and of that amount,

$$\_\_\_\_\_\_\_\_\_\_$ is estimated to be uncollectible.

Q$4$ Bad debt expense is a$($n$)($estimated $/$ known$)$ amount calculated $($at the end of $/$ during$)$ each

accounting period and recorded as an adjustment. This is an application of the $($cost $/$ matching $/$

historical cost$)$ principle. The adjustment to record bad debt expense changes $($total assets $/$ net

income $/$ both $/$ neither$).$ Why?

Q$5$ Above, the $($allowance $/$ direct write$-$off$)$ method is used to report uncollectible accounts. Using

the above amounts, assume that $$2,000$ owed by Customer Ryan was written off as uncollectible.

After the write$-$off, the accounts would report: Accounts receivable $($$$88,000/$ $$90,000/$ $$92,000),$

Allowance for bad debts $($$$2,000/$ $$4,000/$ $$6,000),$ and Accounts receivable, net $($$$84,000/$

$$86,000/$ $$88,000).$ The write$-$off of an uncollectible account changes $($total assets $/$ net income $/$

both $/$ neither$).$ Why?

Note: Accounts receivable, net is also referred to as net realizable value.

Bad debt expense is also referred to as doubtful$-$account expense or uncollectib