The following accounts were abstracted from UMPI Co.'s unadjusted trial balance at December 31, 2017: UMPI estimates that 6% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2017, the allowance for uncollectible accounts should have a credit balance of 41,00033,000180,00030,000 9/1/17 Notes Receivable 50,000 Sales Revenue 50,000 12/31/17 Interest Receivable 1,500 Interest Revenue. 1,500 3/1/18 Cash. 51,500 Notes Receivable 51,500 UMPI Co.'s allowance for uncollectible accounts was $180,000 at the end of 2017 and $190,000 at the end of 2016. For the year ended December 31, 2017, UMPI reported bad debt expense of $31,000 in its income statement. What amount did UMPI debit to the appropriate account in 2017 to write off actual bad debts? Hint: Use a T account for your allowance for uncollectible accounts. 41,00021,00031,00051,000 Question 6 (10 points) A company had credit sales totaling $1,500,000 this year. The company has a policy estimating 1.25% of credit sales to be uncollectible. The Allowance for Doubtful Accounts has a current debit balance of $4,000. Select the correct answer identifying the journal entry What is to record this year's bad debt expense and ending balance in the Allowance for Doubtful Accounts. Bad Debt Expense. $18,750 Allowance D/A 18,750 to record bad debt expense Balance will be CR 14,750 in the allowance account Bad Debt Expense. $18,750 Allowance D/A 18,750 to record bad debt expense Balance will be CR 18,750 in the allowance account Bad Debt Expense.........\$14,750 Allowance D/A 14,750 to record bad debt expense Balance will be CR 14,750 in the allowance account UMPI Corporation sold goods to POP Tart Decorators for $50,000 on September 1 , 2017 , accepting POP Tart's $50,000, 6-month, 6% note. Select the correct journal entries for UMPI's September 1 entry, December 31 annual adjusting entry, and March 1 entry for the collection of the note and interest. The Direct Write Off method is the preferred method when using GAAP standards for financial reporting. True False Question 5 (10 points) The following info applies to UMPI Co.: As a result of a review and aging of accounts receivable at year end, it has been determined that an allowance for doubtful accounts of $16,000 is needed at December 31, 2017. What amount should UMPI record as "bad debt expense" for the year ended December 31, 2017? Hint: use T accounts for the Allowance account to arrive at your amount. 13,00019,00040,00016,000 Assume that all the information is the same as question 2 from above, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entry in part (a)? Bad Debt Expense 20,000 Allowance for Doubtful Accounts. 20,000 Bad Debt Expense 15,000 Allowance for Doubtful Accounts. 15,000 Bad Debt Expense 10,000 Allowance for Doubtful Accounts. .10,000 Bad Debt Expense 25,000 Allowance for Doubtful Accounts. .25,000 On July 13 , Helen sold $19,500 of inventory items on credit with the terms 2/15, net 30. Payment on $12,000 sales was received on July 22 and the remaining payment was received on August 3. Assuming Peter uses the gross method of accounting for sales discounts, which one of the following entries was made on July 2 to record the cash received? Cash. 12,000 A/R. 12,000 Cash. 11,760 A/R. 11,760 Cash. 11,760 Sales Discount....240 A/R. 12,000 Cash. 11,610 Sales Discount....390 A/R 12,000 Bad Debt Expense $14,750 Allowance D/A 14,750 to record bad debt expense Balance will be CR 18,750 in the allowance account 9/1/17 Cash 50,000 Sales Revenue 50,000 12/31/17 Interest Receivable. 1,000 Interest Revenue 1,000 3/1/18 Cash. 51,500 Notes Receivable 50,000 Interest Receivable 1,000 Interest Revenue 500 9/1/17 Notes Receivable. 50,000 Sales Revenue 50,000 12/31/17 Interest Receivable. 1,500 Interest Revenue 1,500 3/1/18 Cash. 51,500 Notes Receivable 50,000 Interest Receivable 1,000 Interest Revenue 500 The entry to write off an uncollectible account when using the allowance method of recognizing bad debts, the write off will have no effect on net income. have no effect on the uncollectible account. decreases net income. increase the allowance for uncollectible accounts. Question 3 (10 points) The trial balance before adjustment of Risen Company reports the following balances: Select the journal entry for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable. Bad Debt Expense 15,000 Allowance for Doubtful Accounts 15,000 Bad Debt Expense 10,000 Allowance for Doubtful Accounts 10,000 Bad Debt Expense 20,000 Allowance for Doubtful Accounts 20,000 Bad Debt Expense .25,000 Allowance for Doubtful Accounts 25,000