Question
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
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 recording the collection of the reestablished receivable on April 4, Year 2?
| Assets | = | Liab. | + | Equity | Rev. | Expenses | = | Net Inc. | Cash Flow | |||||||||
| A. | NA | = | NA | + | NA | NA | NA | = | NA | NA | ||||||||
| B. | 1,050 | = | NA | + | 1,050 | 1,050 | NA | = | 1,050 | 1,050 | OA | |||||||
| C. | 1,050 | = | NA | + | 1,050 | NA | (1,050 | ) | = | 1,050 | 1,050 | OA | ||||||
| D. | NA | = | NA | + | NA | NA | NA | = | NA | 1,050 | OA | |||||||
Multiple Choice
Option A
Option B
Option C
Option D
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Accountants Truth Knowledge And Ethics In The Financial World
Authors: Matthew Gill
1st Edition
0199547149, 9780199547142
