5. Hahn Company uses the percentage of receivables method for recording bad debt expense. Year-end accounts receivable are $1,500,000, and the allowance account has a $2,000 debit balance Management estimates that 1% accounts receivable will be uncollectible. What adjusting entry will Hahn Company make to record the bad debt expense? a. Bad Debt Expense ..13,000 Allowance for Doubtful Accounts 13,000 b. Bad Debt Expense .17,000 Allowance for Doubtful Accounts 17.000 c. Bad Debt Expense ..17,000 Accounts Receivable 17,000 d. Bad Debt Expense...... ..15,000 Accounts Receivable 15,000 LO: 2, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/ Regulatory Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA 6. Liabilities a. are future economic benefits. b. are existing debts and obligations. c. possess service potential. d. are things of value used by the business in its operation. LO3 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7. As of December 31, 2020, Oxford-Welsh Inc. had assets of 9,780,000, liabilities of 2,970,000, and share capital of 4,230,000. Retained earnings as of that date are a. 2,580,000 b. 5,550,000. c. 6,810,000. d. 7,200,000 LO3 BT: AP Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8. Burgundy Inc. purchased supplies on account for 26,000. This transaction will a. increase liabilities and decrease equity by 26,000. b. increase assets and decrease equity by 26,000. c. increase assets and increase liabilities by 26,000. d. have no effect on the accounting equation. LO4 BT: AP Difficulty: Easy TOT: 10 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting