1. An aging of a company\'s accounts receivable indicates that the estimate of u
ID: 2516840 • Letter: 1
Question
1. An aging of a company's accounts receivable indicates that the estimate of uncollectible receivables totals $4,173. If Allowance for Doubtful Accounts has a $974 credit balance, the adjustment to record the bad debt expense for the period will require a
a.debit to Bad Debt Expense for $4,173.
b.credit to Allowance for Doubtful Accounts for $974.
c.debit to Bad Debt Expense for $5,147.
d.debit to Bad Debt Expense for $3,199.
2. If a fixed asset, such as a computer, were purchased on January 1 for $2,107 with an estimated life of 3 years and a salvage or residual value of $242, the journal entry for monthly expense under straight-line depreciation is
a.
b.
c.
d.
3. Sneed Corporation issues 9,500 shares of $46 par preferred stock for cash at $65 per share. The entry to record the transaction will consist of a debit to Cash for $617,500 and a credit or credits to
a.Preferred Stock for $437,000 and Paid-In Capital in Excess of Par—Preferred Stock for $180,500.
b.Preferred Stock for $437,000 and Retained Earnings for $180,500.
c.Paid-In Capital from Preferred Stock for $617,500.
d.Preferred Stock for $617,500.
Depreciation Expense 51.81 Accumulated Depreciation 51.81Explanation / Answer
1. Required adjustment for Bad debts for the period= Total estimated uncollectible receivable - credit bal. in allowance account
= $4,173 - $974
= $3,199
Ans: d. Debit to bad debt expense for $3,199
2. Yearly expense = (Cost - Salvage value)/ Useful life
= ($2,107 - $242) / 3 years
= $621.667
Monthly expense = Yearly expense / 12 months
= $621.667 /12
= $51.81
Ans a. Depreciation expense $51.81
Accumulated depreciation $51.81
3.
Debit Cash $617,500 (9,500 shares ×$65 per share)
Credit Preferred stock $437,000 (9,500 shares ×$46 par value)
Credit Paid in capital in excess of par- preferred stock ($617,500-$437,000) $180,500
Ans. A Preferred stock for $437,000 and Paid-in capital in excess of par-preferred stock for $180,500
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