Question

9 Before year-end adjusting entries, Britt Co.'s account balances at December 31, 2019 for Accounts Receivable and the related Allowance for Doubtful Accounts were $475,000 (debit) and S11,700 (credit), respectively. An aging of accounts receivable indicated that $34,900 of the December 31, 2019 receivables are expected to become uncollectible. The amount of the company's net accounts receivable asset after adjustment is: A. В. $475,000. $463,300 с. D. $451,800. $440,100. 10. For which of the following assets does GAAP require fair value reporting, with the change in fair value each year included in net income? Available-for-sale securities. Inventories. А. Patents Trading securities C. В. D. 11 If inventory quantities and purchase costs are rising over time, the LIFO cost flow method will show a larger amount than the FIFO cost flow method for a company's: A. Cash flow. C. Inventory. Sales revenue. В. Income tax expense D. 12. The following information pertains to Jackson Co.'s accounts receivable at December 31, 2019 Days Qutstanding Estimated % Uncollectible Amount 0-30 31-60 $516,000 193,000 71.000 $780,000 1% 5% 10% Over 60 Jackson's Allowance for Doubtful Accounts at December 31, 2018 was $16,500. During 2019, the company wrote off $14,750 in receivables and recovered $1,200 that was written off in prior years. Given the above information, what amount must Jackson report as Bad Debt Expense in its 2019 income statement? А. $21,910 $18,960. C. $14,750. $13,550. В. D. 13. The effect of a company applying one treatment for an event or transaction in its financial statements and a different treatment for the same event or transaction in its income tax return can best be seen in the account: Deferred Income Taxes. Income Tax Expense. А. С. Income Tax Payable. Income Tax Receivable. В. D.

Answer 1

9) Accounts receivable before adjustment = $ 475,000

Expected uncollectible accounts = $ 34,900

Existing allowance for doubtful accounts = $ 11,700

Balance allowance to be created (34,900-11,700) = $ 23,200

Net Accounts Receivable after adjustment ($ 475,000 - 23,200) = $ 451,800 - Option C

10) GAAP requires the Available for sale securities to be valued at fair value and any changes to be recorded in other comprehensive income every year. Option A

11) Option A: In raising prices, LIFO produces higher cashflow than the FIFO

12) Bad debts wrote off = $ 14,750

Less: Recovery of bad debts previously written off = ($ 1200)

Net Bad debt expense = $ 13,550

Option D

13) Option A: Deferred income taxes arise due to timing differences between taxable and accounting income due to its different treatment.