The following information is from the records of H2O Events for Year 1: Credit sales during the year $2,400,000 Accounts receivable (December 31, Year 1) 410,000 Allowance for doubtful accounts (December 31, Year 55,000 1) Bad debt expense for the year 70,000 Refer to H2O Events. What are the effects on the accounting equation when the company writes off a bad debt under the allowance method? O Assets increase and shareholders' equity decreases. O Assets decrease and shareholders' equity increases. O Assets and shareholders' equity decrease. O There is no effect on overall assets or shareholders' equity.

The following information is from the records of H2O Events for Year 1: Credit sales during the year $2,400,000 Accounts receivable (December 31, Year 1) 410,000 Allowance for doubtful accounts (December 31, Year 55,000 1) Bad debt expense for the year 70,000 Refer to H2O Events. What are the effects on the accounting equation when the company writes off a bad debt under the allowance method? O Assets increase and shareholders' equity decreases. O Assets decrease and shareholders' equity increases. O Assets and shareholders' equity decrease. O There is no effect on overall assets or shareholders' equity.

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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Pichai Party Supplies reported an allowance for doubtful accounts of $24,000 at the beginning of the fiscal year and $32,000 at the end of the fiscal year. During the year, the company recognized bad debt expense of $30,000. What amount did the company record as accounts receivables write-offs during the year? $30,000. $22,000. None of the answers are correct. $32,000. $24,000.
The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.30% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales Revenue $ 373,000 $ 379,000 $ 378,000 Bad Debt Expense Unknown Unknown Unknown Other Expenses 334,000 337,000 334,750 Net Income Unknown Unknown Unknown Required: Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.30% of sales. Assume that the company changes its estimate of uncollectible credit sales to 1.30% in Year 1, 2.30% in Year 2 and 1.80% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.
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The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.40% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales Revenue $ 377,000 $ 383,000 $ 382,000 Bad Debt Expense Unknown Unknown Unknown Other Expenses 330,000 336,000 334,750 Net Income Unknown Unknown Unknown Required: Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.40% of sales. Assume that the company changes its estimate of uncollectible credit sales to 1.40% in Year 1, 2.40% in Year 2 and 1.90% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario
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