1.) In preparing the financial statements for January, the accountant for Team Shirts has compiled the following information: accounts receivable are $5,000; the amount estimated to be uncollectible is 3% of sales for the month; sales for the month were $43,000; and the balance in the allowance for uncollectible accounts is a positive $100. Using the sale method, the amount of bad debts expense for January is____.

A.) $4300

B.) $500

C.) $100

D.) $600

2.) BFS Company sold an asset for $7,500 in cash. The asset had an historical cost of $30,000 and accumulated depreciation of $20,000 on the day it was sold. How much is the gain or loss on the sale?

A. $2,500 loss

B. $2,500 gain

C. $10,000 loss

D. $22,500 gain

3.) Rent-a-wreck Inc paid $36000 cash for two year insurance policy on April 1, 2011. What adjustment should the company make before preparing its annual financial statements on December 31, 2011?

A.) Decrease prepaid insurance and recognize insurance expense of $13500.

B.) Decrease prepaid insurance and recognize insurance expense of $18000.

C.) Decrease Cash and increase Prepaid insurance by $36000.

D.) Decrease Cash and increase Prepaid insurance by $36000.