1. Ray Lumber Company collects $500 on an account that had been directly written off earlier the same year in the amount of $1,000. The journal entry to record the reinstatement transaction would include

a. $1,000 debit to Bad Debts Expense.

b. $1,000 debit to Accounts Receivable.

c. $500 debit to Accounts Receivable. d.

$500 debit to Bad Debts Recovered.

2. The direct write-off method violates the matching principle. True False

3. Under the allowance method, the entry to record a specific uncollectible account write off is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable for the specific customer. True False

4. A customer pays on a specific account that the company had previously written off as uncollectible. The journal entry to record the reinstatement under the allowance method includes a(n)

a. decrease to Cash.

b. decrease to Bad Debts Expense.

c. decrease to Sales.

d. increase to Allowance for Doubtful Accounts.

5. What general ledger account is credited to write off a customer's account as uncollectible if using the allowance method for uncollectible receivables?

a. Allowance for Doubtful Accounts

b. Bad Debts Recovered

c. Bad Debts Expense

d. Accounts Receivable

6. When using the allowance method, writing off an account receivable will increase expenses in the current period. True False

7. Receiving a payment for an account receivable previously written off requires both a debit and a credit to accounts receivable. True False

8. For tax purposes, the law does not permit the allowance for doubtful accounts reserve method of deducting bad debts. True False

9. Companies that feel aging is too time-consuming may estimate Bad Debts based on a percentage of total Accounts Receivable. True False

10. The longer a bill has been due and not paid, the more likely it is that collection will occur very soon. True False1

11 The percentages applied to the balance in the aging categories in a balance sheet approach calculation of bad debt expense are typically based on previous experience. True False