Accounting

5.02 Prototype Assessment Items

These prototype assessment items illustrate the types of items used in the item bank for this objective. All items have been written to match the cognitive process of the apply verb in the objectives. These exact questions will not be used on the secure postassessment, but questions in similar formats will be used.

Writing Off Uncollectible Accounts Receivable Using the Direct Write-Off Method

1. Business Machines uses the direct write-off method when handling uncollectible accounts receivable. Wally's Word Processing owes $400.00 on account. Mountain Business Services has determined this account to be uncollectible. Which is the correct entry for writing off this account?

A. Debit Accounts Receivable/Wally's Word Processing, $400.00; Credit Uncollectible Accounts Expense, $400.00

B. Debit Accounts Receivable/Wally's Word Processing, $400.00; Credit Allowance for Uncollectible Accounts, $400.00

C. Debit Uncollectible Accounts Expense, $400.00; Credit Accounts Receivable/ Wally's Word Processing, $400.00

D. Debit Uncollectible Accounts Expense, $400.00; Credit Allowance for Uncollectible Accounts, $400.00

Estimating and Recording Uncollectible Accounts Expense Using the Percentage of Sales Allowance Method

2. Madison Company estimates uncollectible accounts expense by calculating a percentage of total sales on account. Total sales on account for the year are $200,000.00. In the past, actual uncollectible accounts expense has been about 2.0% of total sales on account. What is the estimated uncollectible accounts expense for the year?

A. $40.00

B. $400.00

C. $4,000.00

D. $40,000.00

5.02 Prototype Assessment Items Page 2

Journalizing Collection of Uncollectible Accounts Receivable

3. On Smart Shoe Supplies received a check for $400.00 from Sam's Shoes, whose account was previously written off. What is the correct entry to re-open the...