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Accounting homework. 2 multiple choice questions. 10 points?

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Accounting homework. 2 multiple choice questions. 10 points?

Postby fogartaigh71 » Mon Apr 30, 2012 10:01 pm

7.Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $600,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is
A.$24,500
B.$23,500
C.$24,000
D. cannot be determined. That is what I picked.

11. Allowance for Doubtful Accounts is classified as a(n) ______ and has a normal ______ balance.
A.owners’ equity, credit
B.contra-asset, debit
C.owners’ equity, debit
D.contra-asset, credit This is what I picked.
fogartaigh71
 
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Accounting homework. 2 multiple choice questions. 10 points?

Postby baynbridge21 » Mon Apr 30, 2012 10:15 pm

7. When bad debts expense is based on a percentage of sales, the balance in the allowance account does not enter into the calculation. The adjusting entry in this case would be:
$600,000 x 4% = $24,000 (the answer is C)

11. You answered this question correctly
baynbridge21
 
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Joined: Mon Mar 21, 2011 7:35 pm


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