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Unformatted text preview: Acct-101 new Quiz 9 A note receivable due in 18 months is listed on the balance sheet under the caption long-term liabilities fixed assets current assets investments When does an account become uncollectible? when the debtor fails to pay an account according to a sales contract when the debtor fails to pay a note on the due date there is no general rule for when an account becomes uncollectible at the end of the fiscal year The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. The entry to write off an account that has been determined to be uncollectible would be as follows: debit Allowance for Doubtful Accounts; credit Accounts Receivable debit Sales Returns and Allowance, credit Accounts Receivable debit Uncollectible Accounts Expense; credit Allowance for Doubtful Accounts debit Accounts Receivable, credit Uncollectible Accounts Expense debit Uncollectible Accounts Expense; credit Accounts Receivable Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 3% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is $18,500 $17,500 18,000 none of the above An estimate based on an analysis of receivables shows that $790 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $120. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of: $120 $790 1 $670...
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