Question

Hi I would like some help with answering the problems and a brief explanation on how its done so I'm able to study, thank you

Question 18

Allowance for Bad Debts has a credit balance of $7,000 at the end of the year (before adjustment), and a "percent of sales" estimate indicates we have accounts that are uncollectible of $11,000. Which of the following entries would correctly record the adjustment to allowance for Bad Debts?

debit Bad Debts Expense, $11,000; credit Allowance for Bad Debts, $11,000

debit Allowance for Bad Debts, $7,000; credit Bad Debts Expense, $7,000

debit Allowance for Bad Debts, $7,000; credit Bad Debts Expense, $7,000

none of these

debit Bad Debts Expense, $18,000; credit Allowance for Bad Debts, $18,,000

Question 20

A 90-day, 10% note for $10,000, dated January 15, is received from a customer on account. The face value of the note is

$10,000

$9,900

$10,100

$10,900

Question 22

A 90-day, 6% note for $36,000, dated Aug. 8, is received from a customer. The due date of the note is

Nov. 6

Nov. 7

Nov. 8

none of these

Question 23

A 90-day, 6% note for $36,000, dated Aug. 8, is received from a customer. The interest due at maturity is

$906

$2,160

$540

$1,080

Answer 1

Answer 18.
	Debit	Credit
Bad Debts	11000
Allowance for Bad Debts		11000

      
Explanation:       
Bad debts is an expense for the company and the expenses are always debited. Therefore, bad debt expense is debited. Allowance for doubtful debt is contra to Asset and the contra assets are always credited. Therefore, allowance for doubtful debt is credited for the for the amount during the year.    
      
Answer 20.      
Face Value will be $ 10,000      
      
(Since Note is for $10,000 so face value will be $10,000      
      
Answer 22.      
Due Date will Nov. 6         
      
Issue Date Aug. 8 + 90 days = Nov. 6      
       
Answer 23.      
      
Interest Due at Maturity = $540 ( $36,000 * 6% * 90 / 360 days)