Question

t 23) A company uses the percent of sales method to determine the end of the current year, the coman's unadjusied ra its bad debes expense. Ad balance eeponed he lowing o Accounts receivable Allowance for uncollectible accounts $375,000 Net Sales 800,000 credis All sales are made on credit. Based on past experience, the compamy of net credit sales are uncollectible. What amon should be estimahes that 0.% Expense when the year-end adjusting entry is prepared A) $1,275 B) $1,775 C) S4,500 D) $4,800 E) $5,500 24) A company has $90,000 in outstanding accounts receivable and it uses the alowance method to account for uncollectible accounts. Experience saggeststat 4%of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for A) $2,800 B) $3,568 C) $3,632 D) $3,600 E) $4,400 25) Honoring a note receivable indicates that the maker has: A) Signed B) Paid in full. C) Guaranteed D) Notarized E) Cosigned

Answer 1

23) D) $4800

Bad debt expense = 0.6% of credit sales = $800,000*0.6% = $4800

Bad debts expense account debit 4800, allowance for uncollectible accounts credit 4800.

24) D) $3600

Bad debt expense = 4% of outstanding accounts receivable = 90,000*4% = $3600

Bad debt expense account debit 3600, allowance for doubtful accounts credit 3600

25) B) paid in full

When maker of note receivable makes the full payment as per terms it is said to be honored.