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1. A firm, using the allowance method of recording credit losses, wrote off a customer's account in the amount of $500. Later, the customer paid the account. The firm reinstated the account by means of a journal entry and then recorded the collection. What is the result of these procedures? a. Increases total assets by $500 b. Decreases total assets by $500 Decreases total assets by $1,000 d. Has no effect on total assets C.

1. A firm, using the allowance method of recording credit losses, wrote off a customer's account in the amount of $500. Later, the customer paid the account. The firm reinstated the account by means of a journal entry and then recorded the collection. What is the result of these procedures? a. Increases total assets by $500 b. Decreases total assets by $500 Decreases total assets by $1,000 d. Has no effect on total assets C.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please solve all the MCQ with detailed answer for both correct and incorrect answers

(Answers to the Self-Study Questions dare available at the end of this chapter.) 1. A firm, using the allowance method of recording credit losses, wrote off a customer's account in the amount of $500. Later, the customer paid the account. The firm reinstated the account by means of a journal entry and then recorded the collection. What is the result of these procedures? a. Increases total assets by S500 b. Decreases total assets by $500 c. Decreases total assets by S1,000 d. Has no effect on total assets L01, 2 LO2 2. A firm has accounts receivable of $90,000 and a debit balance of $900 in the Allowance for Doubtful Accounts. Two-thirds of the accounts receivable are current and one-third is past due. The firm estimates that two percent of the current accounts and five percent of the past due accounts will prove to be uncollectible. The adjusting entry to provide for the bad debts expense under the aging method should be for what amount? a. $2,700 b. $3,600 c. $1,800 d. $4,500 3. A firm receives a six-month note from a customer. The note has a face amount of $4,000 and an interest rate of nine percent. What is the total amount of interest to be received? a. $1,080 b. $30 c. $360 d. $180 LO4 ATRC 4. A business has net sales of $60,000, a beginning balance in Accounts Receivable of $5,000, and an ending balance in Accounts Receivable of $7,000. What is the company's accounts receivable turnover? 10.0 b. 12.0 c. 8.6 d. 9.2 LO5 a. 5. A business has an accounts receivable turnover of ten. What is the company's average collection period? 36.0 LOS a. b. 30.8 c. 34.6 d. 36.5
Transcribed Image Text:(Answers to the Self-Study Questions dare available at the end of this chapter.) 1. A firm, using the allowance method of recording credit losses, wrote off a customer's account in the amount of $500. Later, the customer paid the account. The firm reinstated the account by means of a journal entry and then recorded the collection. What is the result of these procedures? a. Increases total assets by S500 b. Decreases total assets by $500 c. Decreases total assets by S1,000 d. Has no effect on total assets L01, 2 LO2 2. A firm has accounts receivable of $90,000 and a debit balance of $900 in the Allowance for Doubtful Accounts. Two-thirds of the accounts receivable are current and one-third is past due. The firm estimates that two percent of the current accounts and five percent of the past due accounts will prove to be uncollectible. The adjusting entry to provide for the bad debts expense under the aging method should be for what amount? a. $2,700 b. $3,600 c. $1,800 d. $4,500 3. A firm receives a six-month note from a customer. The note has a face amount of $4,000 and an interest rate of nine percent. What is the total amount of interest to be received? a. $1,080 b. $30 c. $360 d. $180 LO4 ATRC 4. A business has net sales of $60,000, a beginning balance in Accounts Receivable of $5,000, and an ending balance in Accounts Receivable of $7,000. What is the company's accounts receivable turnover? 10.0 b. 12.0 c. 8.6 d. 9.2 LO5 a. 5. A business has an accounts receivable turnover of ten. What is the company's average collection period? 36.0 LOS a. b. 30.8 c. 34.6 d. 36.5
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