On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun uses the allowance method. On February 15, Year 2, one of Loudoun'scustomers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050.Which of the following correctly states the effect of recording the collection of the reestablished receivable on April 4, Year 2?A.B.C.D.Assets1,050 (1,050)1,0501,0501,050 (1,050)Multiple ChoiceOption AOption DOption COption BBalance Sheet= Liabilities +ΝΑΝΑΝΑΝΑStockholders'EquityΝΑ1,0501,050ΝΑRevenueΝΑ1,050ΝΑΝΑIncome StatementExpense = Net IncomeNAΝΑΝΑ1,050(1,050)1,050ΝΑΝΑStatementof CashFlowsNA1,050 OA1,050 OA1,050 OAJhay

The account receivables is the current assets for the business. The allowance for doubtful accounts…

Assets 050 (1,050) 1,050 1,050 050 (1,050) e Choice Balance Sheet Stockholders' Equity NA = Liabilities + NA NA NA NA 1,050 1,050 NA Revenue NA 1,050 ΝΑ ΝΑ Income Statement Expense = Net Income NA NA (1,050) NA NA 1,050 1,050 NA April 4, Statement of Cash Flows ΝΑ 1,050 OA 1,050 OA 1,050 0A

Assets 050 (1,050) 1,050 1,050 050 (1,050) e Choice Balance Sheet Stockholders' Equity NA = Liabilities + NA NA NA NA 1,050 1,050 NA Revenue NA 1,050 ΝΑ ΝΑ Income Statement Expense = Net Income NA NA (1,050) NA NA 1,050 1,050 NA April 4, Statement of Cash Flows ΝΑ 1,050 OA 1,050 OA 1,050 0A

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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Question

On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun uses the allowance method. On February 15, Year 2, one of Loudoun's
customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050.
Which of the following correctly states the effect of recording the collection of the reestablished receivable on April 4, Year 2?
A.
B.
C.
D.
Assets
1,050 (1,050)
1,050
1,050
1,050 (1,050)
Multiple Choice
Option A
Option D
Option C
Option B
Balance Sheet
= Liabilities +
ΝΑ
ΝΑ
ΝΑ
ΝΑ
Stockholders'
Equity
ΝΑ
1,050
1,050
ΝΑ
Revenue
ΝΑ
1,050
ΝΑ
ΝΑ
Income Statement
Expense = Net Income
NA
ΝΑ
ΝΑ
1,050
(1,050)
1,050
ΝΑ
ΝΑ
Statement
of Cash
Flows
NA
1,050 OA
1,050 OA
1,050 OA
Jhay

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