____ 4. The following information is from the records of Prosser, Inc. for the y
ID: 2591875 • Letter: #
Question
____ 4. The following information is from the records of Prosser, Inc. for the year ended December 31, 2016.
Allowance for Doubtful Accounts, January 1, 2016 ..
$ 6,000
(cr)
Credit Sales, 2016 ...............................
2,920,000
Sales Returns and Allowances, 2016 ................
32,000
If the basis for estimating bad debts is 1 percent of net sales, the correct amount of doubtful accounts expense for 2016 is
a.
$22,800.
b.
$23,200.
c.
$28,880.
d.
$34,880
4b Assume Joe Smith a customer with an account balance of $1,000 is bankrupt.
The controller asks you to write off his account, the journal entry is:
____ 5. Gekko, Inc. reported the following balances (after adjustment) at the end of 2016 and 2015.
12/31/2016
12/31/2015
Total accounts receivable .................
$105,000
$96,000
Net accounts receivable ...................
102,000
94,500
During 2016, Gekko wrote off customer accounts totaling $3,200 and collected $800 on accounts written off in previous years. Gekko's doubtful accounts expense for the year ending December 31, 2016 is
a.
$1,500.
b.
$2,400.
c.
$3,000.
d.
$3,900.
____ 7. Gray Company had an accounts receivable balance of $50,000 on December 31, 2015, and $75,000 on December 31, 2016. The company wrote off $20,000 of accounts receivable during 2016, and collected $3,000 on an account written off in 2014. Sales for the year 2016 totaled $620,000. All sales were on account. The amount collected from customers on accounts receivable during 2016 was
a.
$575,000.
b.
$578,000.
c.
$600,000.
d.
$595,000.
____ 11. Franchise fees are properly recognized as revenue
a.
when received in cash.
b.
when a contractual agreement has been signed.
c.
after the franchise business has begun operations.
d.
after the franchiser has substantially performed its service.
Allowance for Doubtful Accounts, January 1, 2016 ..
$ 6,000
(cr)
Credit Sales, 2016 ...............................
2,920,000
Sales Returns and Allowances, 2016 ................
32,000
Explanation / Answer
4. option c is correct
4b. Entry:
5. option d is correct:
7. option a is correct
11. option D is correct
a Credit sales, net 28,88,000 b Percentage allowance 1.0% c=a*b Bad debt expense 28,880Related Questions
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