If Edsel uses the gross accounts receivable approach for estimating the allowance for credit losses, the income statement will show an expense of A) $2,100 B) $3,600 C) $5,100 D) $8,500 6) When a specific account receivable is written off, the entry A) increases net income. B) decreases net income. C) can either decrease or increase net income. D) has no effect on net income. 7) Management must periodically assess the reasonableness of the allowance for credit losses if it uses the A) direct write-off method. B) percent of sales method only. C) percent of gross receivables method only. D) percent of sales or the percent of gross receivables method. 8) Smith Company is a manufacturer of medical devices and has an excellent quality control department, thus defective product returns are rare. In 20X1, Smith reported sales of $276,344,000. The company did, however, have two returns in 20X1 related to the wrong product model being shipped. Smith's 20X1 journal entry to record a $37,500 return from a customer (Foxtrot Medical) would be: A) DR Sales returns and allowances $37,500CR Accounts receivable-Foxtrot Medical $37,500 B) DR Sales returns and allowances $37,500 CR Sales $37,500 C) DR Sales $37,500 CR Accounts receivable-Foxtrot Medical $37,500 D) DR Sales returns expense $37,500 CR Accounts receivable-Foxtrot Medical $37,500