6. DEF Company uses the Income Statement approach to calculate Bad

Debts expense and record the Allowance for Doubtful Accounts related to

them. During the year, net credit sales amounted to $240,000. Accounts

Receivable had a balance of $11,000 at year-end. It is estimated that 4% of the

net credit sales are uncollectible. What is the year-end adjusting journal entry?

to record bad debts expense?

a. Accounts Receivable ---------------------------------------- 9,600

Allowance for Doubtful Accounts ------------------ 9,600

b. Allowance for Doubtful Accounts ----------------------- 9,600

Bad Debts Expense ------------------------------------- 9,600

c. Allowance for Doubtful Accounts ----------------------- 9,600

Accounts Receivable ----------------------------------- 9,600

d. Cash ------------------------------------------------------------- 300

Bad Debts Expense ------------------------------------- 300

e. Bad Debts Expense ------------------------------------------ 9,600

Allowance for Doubtful Accounts ----------------- 9,600

4. . GHI Company estimates Bad Debts Expense to be 2% of net credit sales.

The following data is available for 2022:

Allowance for Doubtful Accounts, 1/1/2022 $ 21,000 Cr.

Accounts written-off as uncollectible during 2022 $ 13,000

Net credit sales in 2022 $ 3,000,000

The Allowance for Doubtful Accounts balance, after adjustment, on December

31, 2022, will be:

a. $60,000

b. $68,000

c. $81,000

d. $13,000

e. None of the above.

10, The journal entry to record the purchase on account of merchandise for

resale of $1,000, plus HST of 13% (assuming a perpetual inventory system)

is:

a. Merchandise Inventory -------------------------------------- 1,130

Accounts Payable ----------------------------------------- 1,130

b. Merchandise Inventory -------------------------------------- 1,130

Accounts Payable ----------------------------------------- 1,000

HST Recoverable ------------------------------------------ 130

c. Merchandise Inventory -------------------------------------- 1,000

HST Payable ----------------------------------------------------- 130

Accounts Payable ----------------------------------------- 1,130

d. Merchandise Inventory ------------------------------------- 1,000

HST Recoverable ---------------------------------------------- 130

Accounts Payable ---------------------------------------- 1,130

11 The journal entry to record the return of $500 of the merchandise

purchased in Question #10 to the supplier is:

a. Accounts Payable ---------------------------------------------- 565

HST Recoverable ------------------------------------------ 65

Merchandise Inventory ---------------------------------- 500

b. Accounts Payable ---------------------------------------------- 565

Merchandise Inventory --------------------------------- 565

c. Accounts Payable ---------------------------------------------- 565

HST Recoverable ------------------------------------------ 65

Purchase Returns and Allowances -------------------- 500

d. Accounts Payable ---------------------------------------------- 500

HST Payable ----------------------------------------------------- 65

Merchandise Inventory ---------------------------------- 565

12. . The journal entry by a grocery store to record the cash purchase for $1,000

(plus HST of 13%) of equipment for storing food in the store is:

a. Equipment -------------------------------------------------------- 1,000

HST Recoverable ------------------------------------------------ 130

Cash ------------------------------------------------------- 1,130

b. Equipment ------------------------------------------------------- 1,000

HST Payable ----------------------------------------------------- 130

Cash ------------------------------------------------------ 1,130

c. Equipment ------------------------------------------------------- 1,130

Cash ------------------------------------------------------- 1,130

d. Equipment -------------------------------------------------------- 1,130

HST Recoverable ------------------------------------------------ 130

Cash ------------------------------------------------------- 1,000