company has Net Credit Sales of $700,000 for the year and it estimates that unco
ID: 2576573 • Letter: C
Question
company has Net Credit Sales of $700,000 for the year and it estimates that uncollectible accounts will be 2% of Net Sales. If Allowance for Doubtful Accounts has a credit (CR) balance of S1,000 prior to adjustment, its balance after adjustment will be a credit (CR) of A) $14,000. B) $15,000. C) $13,980. D) $13,000. 19. A 20. The Interest on a ss,000, 10%, 1-year Note Receivable is A) $5,000. B) $500. C) $5,050. D) $5,500. 21. The Interest on a S4,000, 6%, 60-day note receivable is A) $240. B) $40. C) $80. D) $120. 22. The Interest on a SS000, 6%, 90-day note receivable is A) $300. B) $150. C) $75. D) $225. On November 1, Kinder Company received a S6,000, 10%, three-month (3) note receivable. The cash to be received by Kinder Company when the note becomes due (or its Maturity Value) is A) $6,000. B) $6,100. C) $6,150. D) $6,600. 23.Explanation / Answer
Answer:
1
Bbalance after adjustment will be =$15,000.
Working notes for the above answer is as under
Description
debit $
Credit $
bad debt expanses (700,000*2%)
14000
To allowance for doubt full account
14000
So net balance after adjustment will be
=1000+14000
=15,000
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2
Interest o note receivable
=5000 *10% * 1 year
=5000*10%*1
=$500
Interest o note receivable of year=$500
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3
Interest o note receivable of 60 days
=4000 *6% * 60/360
=$40
Interest o note receivable of 60 days=$40
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4
Interest o note receivable of 90 days
=5000 *6% * 90/360
=$75
Interest o note receivable of 90 days=$75
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5
Cash to be received by Kinder company
=Amount of note recivebale + interest
=6000+ (6000*10%*3/12)
=6000+150
=$6150
Cash to be received by Kinder company =$6150
Description
debit $
Credit $
bad debt expanses (700,000*2%)
14000
To allowance for doubt full account
14000
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