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Valuation allowances are typically contra-accounts, but they can also be the opposite of a contra-account. On rare occas...

Valuation allowances are typically contra-accounts, but they can also be the opposite of a contra-account. On rare occasion, valuation accounts can also add value to the related account. These are known as adjunct accounts.

Examples of accounts that have contra accounts:

  • Accounts Receivable
  • Inventory (optional – we did not study write-downs using contra accounts)
  • Note Receivable
  • Equipment
  • Investment in Stocks (see chapter 12)
  • Deferred Tax Assets (see chapter 16)
  • Note Payable
  • Owners’ equity also has a well-known contra account. (see chapter 18)

For each of these, indicate the name of the contra account. For two (just two), indicate the name of the adjunct account. At a minimum enter the names of eight contra accounts and two adjunct accounts. For the opportunity to earn extra credit, enter the contra accounts for all 8 accounts/elements above, but just two adjunct accounts.

Name of contra account

Name of adjunct account (applies only to 2)

Accounts Receivable

Inventory (optional – we did not study write-downs using contra accounts)

Note Receivable

Equipment

Investment in Stocks (see chapter 12)

Deferred Tax Assets (see chapter 16)

Note Payable

Owners’ equity also has a well-known contra account. (see chapter 18)

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Answer #1

Answer of the above problem is as under:

Particulars Name of the Contra Account Name of Adjunct Account
Accounts Receivable Allowance for Bad and Doubtful Accounts
Inventory Inventory Reserve Account
Note Receivable Discount on Notes Receivable
Equipment Accumulated Depreciation on Equipment Asset Revaluation Reserve
Investment in Stocks Investment Fluctuation Reserve Account
Deferred Tax Assets Deferred Tax Valuation Allowance
Note Payable Discount on Notes Payable Premium on Note Payable Account
Owner's Equity Owners' Drawing Account
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