Question

43. Your company, which uses accrual basis accounting, pays $18,000 in advance to cover a 3-year insurance premium and debits Prepaid Insurance. How much insurance expense has your company incurred after 1 year has elapsed? a. $18,000 b. $12,000 c. $6,000 d. $0 Use the following information for Questions 44 and 45: Your company shows the following data at the end of its first year: Credit sales for the year Accounts Receivable balance Allowance for Doubtful Accounts $1,000,000 100,000 4,000 credit balance 44. If bad debt is estimated as 1% of credit sales, the adjusting entry for bad debt expense includes a debit for... a. $14,000. b. $10,000. c. $6,000. d. $0. 45. If your company estimates that it will not collect 5% of its accounts receiv- able, the year-end adjustment to Allowance For Doubtful Accounts will be a. a credit of $1,000. b. a credit of $5,000. c. a debit of $1,000. d. a debit of $5,000. 46. If December 1, your company opens for business and leases space in a building for $1,000 per month and pays 3 months' rent in advance. On December 31, the balance in Rent Expense is $3,000, it means that the advance payment for rent was recorded in ... a. Prepaid Rent, which must now be credited for $1,000. b. Rent Expense, which must now be credited for $2,000. c. Prepaid Rent, which must now be debited for $1,000. d. Rent Expense, which must now be debited for $2,000.

Answer 1

L Insurance paid for 3 years is $18000. , yearly insurance expense $ 18000 3 years i s $6000 / year la Answer is $6000 ③ 1% ( creolit Salls) = 1% (1000000) - $10000 alreade the balance in allowances Alc is 4000, .. we need to create bad debts for only $ 6000 (10000 - 4000) JA Answer = $6ooo! ☺ 5.6( Account Receivables) - 5.7.(100000) ) is = $40oo. Balance in allowances Alc still we need $1000 credit allowances - with $1000. Answer:- a credit for doubtful accounts of $1000 Rent paid a $3000./3 months. A Advanie Rent is recorded in prepaid sent. Amount of prepaid Rent is $2000. prepaid crent will have debit balance of $ 2000