3.00 points 40. An aging analysis of the A/R subsidiary ledger Indicated that $1

Question

3.00 points 40. An aging analysis of the A/R subsidiary ledger Indicated that $14,650 of the $240,000 accounts receivable baiance would be uncollectibie. Which one of the following statements is correct if the A/R aging method (% of recelvables approach) is used with respect to making the AJE at the end of the yeat, December 312 The net AR reported on the balance sheet would be $222350 O Total "Sales" reported on the income statement- $950.000 O The AJE would include a debit to "bad debt expense for $11,650 O Write-off percentages used in an aging analysis are normally gotten from a trade magazine related to the industry in which a company operates [eg a coffee growers/distributors magazine in this problem) 8 8 9

Explanation / Answer

Question : 1) Account Receivable $                  2,40,000 Amount to be write off = $                      14,650 Balance to be shown in $                        3,000 Balance to be shown in Bad Debt Expesnes $                      11,650 Answer = Option 3 = The AE would include a debit to Bad debt expenses for $ 11,650 Question : 2) Amount given on loan = $                      20,000 interest @ 6% = $                        1,200 Interest for the 9 months = $ 1,200 X 9/ 12 = $                            900 Answer = Option 2 = $ 900 Question: 3) in the merchandise ferm they have no raw material because they cannot manufacture any material Answer = Option 3 = Raw Material inventory Question 4) Term 2/10 , n/30 means if the payment is made with in 10 days than there is discount of 2% otherwise normal credit period is 30 Days Answer= Option 2 = Inventory is credited

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