Question
Assets = Liab. + Equity Rev. Expenses = Net Inc. Cash Flow A. (3,375 ) = 3,375 + NA NA NA = NA NA B.
| Assets | = | Liab. | + | Equity | Rev. | Expenses | = | Net Inc. | Cash Flow | |||||||||
| A. | (3,375 | ) | = | 3,375 | + | NA | NA | NA | = | NA | NA | |||||||
| B. | (3,375 | ) | = | NA | + | (3,375 | ) | NA | 3,375 | = | (3,375 | ) | NA | |||||
| C. | 3,375 | = | NA | + | 3,375 | NA | (3,375 | ) | = | 3,375 | 3,375 | OA | ||||||
| D. | NA | = | NA | + | NA | NA | NA | = | NA | NA | ||||||||
On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun uses the allowance method of accounting for uncollectible accounts. In February of Year 2, one of Loudoun's customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050. Which of the following answers correctly states the effect of the December 31, Year 1 adjusting entry for uncollectible accounts on the financial statements of the Loudoun Corporation?
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Accounting Principles Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
8th Canadian Edition
111950242X, 1-119-50242-5, 978-1119502425
