1. From page 5-6 of the VLN, when does a company write off an account?Group of answer choicesA. At the end of the year as an adjusting entry.B. At the beginning of the year as an opening entry.C. As soon as the account goes bad.D. At the end of the year as a closing entry.2. From page 5-7 of the VLN, CCT writes off customer W’s account receivable. Which is true?Group of answer choicesA. Cash decreased $1,000.B. Bad debt expense increased $1,000.C. Accounts receivable decreased by $1,000.D. Net Accounts receivable decreased by $1,000. Notice that before and after the write-of1, the company stillexpects to collect the $25,500 of credit sales made lastRevenues Expenses Net incomeyear.AssetLiabilitiesStockholders' EquityJA/R -4001/2 AUA -400àNECommon Stock Retained EarningsNENENEA+400NENEBefore Write off AfterS30.000Accounts ReceivableAllowance for uncollectible accounts $4,500Net accounts receivable-40029,600-4004,100$25,500S25,500PracticeCHP finds out on May 10th that Customer W's accountreceivable for $1,000 from services provided last year isuncollectible. Prior to writing-off Customer W's A/R theallowance for uncollectible accounts had a credit (normal)balance of $8,300 and their A/R balance was $285,000. Recordthe effects of the write-off on May 10th.5/10A/RAllowance for uncollectible accounts285.000|8,300What was CHP’s net A/R before the write-off and after thewrite off?Before Write off AfterAccounts ReceivableAllowance for uncollectible accounts $8,300$285,000Net accounts receivable$276,700Collection of Amounts Previously Written OffLater in the year Customer W is able to pay $300 of his previous$1,000 he owed the company. He pays the company $300.Re-establish the Accounts Receivable for the amount paid bypartially reversing the write-off on May 10th as follows:300Accounts Receivable (A+)Allowance for uncollectible accounts (XA+àA-)300To re-establish a portion of Customer W's A/R previously written offThen record customer W's payment:300Cash (A+)Accounts Receivable (A-)300 The ending balance in the Allowance for UncollectibleAccounts shows $1,000 debit; however, based on the aging ofAccounts Receivable it should be $4,300.A/RAllowance for uncollectible accounts30,0001,0005,300 adj.4,300The adjusting entry to record Bad Debt expense and update theAllowance for Uncollectible Accounts would need to be 5,300to get the ending balance in the Allowance account to $4,300.5,3005,300Bad debt expense (E+àSE-)Allowance for uncollectible accounts (XA+àA-)What should D report as bad debt expense on their 12/31 Income Statement? $D would report net accounts receivable on their 12/31 Balance Sheet at:WRITING OFF AN ACCOUNT RECEIVABLE-Only Balance sheet accounts (Asset accounts) are affectedAccounts receivable (A) decreases (the A/R is removed)Allowance for uncollectible accounts (XA) decreases-Write off the account as soon as it goes "bad" (managementdetermines it is uncollectible)-Net A/R does not change, it is the same as it was before thewrite-off.Example:On January 1st D Company discovers that customer E will notbe able to pay the $400 it owes them from service provided lastyear. The company writes off E’s account on January 1st.|1/1 Allowance for uncollectible accounts (XA-àA+)400|400Accounts Receivable (A-)To write off Customer E's A/R due to bankruptcy proceedingsA/RAllowance for uncollectible accounts30,000400 (1/1)29,6004,500400 (1/1)4,100Notice that before and after the write-off, the company stillexpects to collect the $25,500 of credit sales made last year.

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Answered: From page 5-6 of the VLN, when does a…

10th Edition

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Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q