Question

4. The Taylor Company accounts include the following 12/31 unadjusted balances: Credit Debit $300,000 1,200 Accounts Receivable Allowance for Doubtful Accounts Net Credit Sales $7,000,000 Taylor Company estimates that 2% of gross accounts receivable will become uncollectible. After adjustment on December 31, the Bad Debt Expense account will have a balance of: a) b) oso $14,000 $12,800 $4,800 $6,000 $7,200 5. Accounts Receivable has a debit balance of $5,000, and the Allowance for Uncollectible Accounts has a credit balance of $280. A specific account of $160 is written off. What is th amount of net receivables after the write-off? AR SK 160 Too 280 $4,720 $4,400 $4,560 $5,000 $5,280

Answer 1

Question 4

Correct answer-----------(e) $7200

Working

Estimated balance of allowance for uncollectables (300000 x 2%=$6000)	$        6,000.00	Cr
Add: Balance in Allowance for uncollectable account (Dr)*	$        1,200.00	Dr
Total bad debts to be recorded	$        7,200.00	Cr

*A credit balance would have been deducted instead of add.

Question 5

Correct answer-----------(A) $4720

Working

	Before write off	Effect by write off	Ending balance after write off
Accounts receivable balance	$         5,000.00	$   (160.00)	$         4,840.00
Less: Allowance for doubtful accounts	$             280.00	$   (160.00)	$            120.00
Net accounts receivable	$         4,720.00		$         4,720.00

When receivable are actually written off then accounts receivable is credited and allowance for doubtful account is debited. So both accounts receivable and allowance account balance decrease by writeoff of accounts.