Question 2 The Black Lab Corporation has the following items at year-end: $45,000 Cash in Bank Petty Cash 500 Short-term paper with maturity of 2 months 8,200 Postdates checks 2,100 The company should report cash and cash equivalents of a. S45,000 b. S45,500 O c. S53,700 d. S55.800 Question 3 Trade discounts are O a. not recorded in accounts: rather they are a means of computing a price. b. used to avoid frequent changes in catalogues. c. used to quote different prices for different quantities purchased. O d. all of the above Question 4 Why is the allowance method preferred over the direct write-off method of accounting for bad debt? O Allowance method is used for tax purposes. Determining worthless accounts under the direct write-off method is difficult to do. Improved matching of bad debt expense with revenue. O Estimates are used Question 5 What is the normal journal entry for recording bad debt expense under the allowance method? O Debit Allowance for Doubtful Accounts, credit Accounts Receivable O Debit Allowance for Doubtful Accounts, credit Bad Debt Expense O Debit Bad Debt Expense, credit Allowance for Doubtful Accounts Debit Accounts Receivable, credit Allowance for Doubtful Accounts