Question

19. The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debt expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the balance of the Allowance for Bad Debts reported on the balance sheet at December 31, 2015? A) $7,275 B) $3,075 C) $7,000 D) $5,285 20. Which of the following receivables would not be classified as an "other receivable"? a. Advance to an employee b. Refundable income tax c. Notes receivable d. Interest receivable 21. Notes or accounts receivables that result from sales transactions are often called a. sales receivables. b. non-trade receivables. c. trade receivables.

Answer 1

19. Opening balance of bad debts Account credit balance 2000 before adjustment and 2% on sale uncollectible (2% × 250,000= 5,000)

Total balance is 2000+5000= 7000 will be reported on balance sheet as allowance for bad debts on December 31, 2015.

20. Note receivable correct answer

There is three types of receivable

1. Account receivable : Here amount will be collected from from customers because of company supplies the goods or services on credit bases to it's customer.

2. Notes receivable :it's related to indebtedness and value of money in written words and legally promise to receive the amount from other party by signing the both parties. Example: promissory note

3. Other receivable : these are not trade receivables example : interest receivable and advance to employee etc.

3. Trade receivables is correct answer

Trade means buying and selling of goods or services , Account and notes receivable means it's amount owed by customer or receivable due from customers because of supply of goods or services on credit bases. So that trade receivable is another name for Account or notes receivable.