ACC Page 3 (C) First-In-, First-Out (D) Straight Line (2 marks) GAAP prefers companies to use which of the following methods to account for bad debts? (A) Direct write-off (B) Allowance (C) 360-day (D) Amortization (2 marks) The Allowance for uncollectible accounts currently has a debit balance of $1,000. The company's management estimates that 2.0% of net credit sales will be uncollectible. Net credit sales are $260,000. What will be the balance of the Allowance for uncollectible accounts reported on the balance sheet? (A) $5,200 (B) $6,200 (C) $1,000 (D) $4,200 (2 marks) Which of the following characteristics of a corporation limits a stockholder's loss to the amount of his or her investment in the stock of the corporation? (A) Transferability of ownership (B) Limited liability (C) Separate legal entity (D) Separation of ownership and management (2 marks) The following information is from the balance sheet of Judo Corporation as of December 31, 2014. Preferred stock, $100 par $ 600,000 Paid-in capital in excess of par-preferred 50,000 Common stock, $1 par 300,000 Paid-in capital in excess of par--common 520,000 Retained earnings 320,000 10. Total stockholders' equity $1.790.000 What was the total paid-in capital as of December 31, 2014? (A) $1,790,000 (B) $900,000 (C) $320,000 (D) $1,470,000 (2 marks) Haney Corporation issued 20,000 shares of common stock on January 1, 2014. The stock has par value of $1.00 per share and was sold at $30 per share. Which of the following is the correct journal entry to record this transaction? (A) credit Cash $600,000, debit Common stock $20,000, and debit Paid-in capital $580,000. (B) debit Cash $600,000 and credit Paid-in capital $600,000. (C) debit Cash $600,000, credit Common stock $20,000, and credit Paid-in capital $580,000, (D) debit Cash $600,000 and credit Common stock $600,000. (2 marks)