Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $400,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,200 before adjustment?

a.

Bad Debt Expense	18,800
Allowance for Doubtful Accounts		18,800

b.

Bad Debt Expense	16,800
Allowance for Doubtful Accounts		16,800

c.

Bad Debt Expense	17,800
Allowance for Doubtful Accounts		17,800

d.

Bad Debt Expense	17,300
Allowance for Doubtful Accounts		17,300

Question Content Area

Paper Company receives a $3,086, 3-month, 11% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

a.

Notes ReceivableDame Company	$3,171
Accounts ReceivableDame Company		$3,086
Interest Revenue		$85

b.

Notes ReceivableDame Company	$3,171
Accounts ReceivableDame Company		$3,171

c.

Notes ReceivableDame Company	$3,086
Accounts ReceivableDame Company		$3,086

d.

Notes ReceivableDame Company	$3,171
Interest Receivable		$85
Accounts ReceivableDame Company		$3,086
Interest Receivable		$85