13. The Exam Fun Co. had Accounts Receivable of $100,000 and a ful Accounts on 1

Question

13. The Exam Fun Co. had Accounts Receivable of $100,000 and a ful Accounts on 12/31/10. The company estimates credit balance of $2,000 in adWhich of the following is the correct journal entry for recording the estimate of bad debt the receivables will dr. Bad Debt Expense 3,000 and er. Allowance for Doubtful accounts 3,000 , dr. Bad Debt Expense 5,000 and cr. Accounts Receivable 3,000 Jdr. Bad Debt Expense 5,000 and cr. Allowance for Doubtful Accounts 3,000 dr. Bad Debt Expense 7.000 and cr. Allowance for Doubtful Accounts 7,00 5000-200O -3000 Use the following information to answer the next two suestions The Cavallas Co. had the following balances in selected accounts on 12/31/10. Cavallas Co Balances in Selected Accounts Accounts receivable Allowance for doubtful accounts Bad Debt Expense Sales Sales returns 100,000 1,000 500,000 50,000 14. The company estimates that 4%oof Accounts Receivable will never be collected. The adjusting journal entry to record the estimate of bad debt expense is Ardr.Bad Debt Expense and er. Accounts Receivable, 4,000 B. dr. Bad Debt Expense and cr. Allowance for Doubtful Accounts 4,000 C dr. Bad Debt Expense and cr. Allowance for Doubtful Accounts 5,000 D. dr. Bad Debt Expense and cr. Allowance for Doubtful Accounts 3,000 500 000-50,0oo) 15. The company estimates that 4% of Accounts Receivable will never be collected. What is the required ending balance of Allowance for Doubtful Accounts on 12/31/10 A. 4,000. B. 5,000. C. 1,000 D. 6,000

Explanation / Answer

1- A

Debit Bad debt expense -3000

Credit allowance for doubtful debts 3000

Allowance for the Year = (100000*5%-2000) =3000

2- C

Debit Bad debt expense -5000

Credit allowance for doubtful debts 5000

Allowance for the Year = (100000*4%+1000) =5000

3- B -5000

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