Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Question

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 1SSQ

To determine

Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Expert Solution & Answer

Answer to Problem 1SSQ

The result of these procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection is option d. has no effect on total assets.

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Justification for wrong options:

Option a.

The increase in total assets by $500 is incorrect answer because, the receipt of cash for which bad debt previously written-off has no effect on the balance sheet.

Option b.

The decrease in total assets by $500 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Option c.

The decrease in total assets by $1,000 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Justification for Correct Option:

When cash is received for bad debts previously written-off as bad debt, then the cash account is debited and accounts receivable account is credited for the same amount. As an effect of cash account will increase and accounts receivable will decrease for the same amount. Hence, this issue has no effect in the total assets.

Therefore, the correct answer is option d. has no effect on total assets.

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 1SSQ

To determine

Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Expert Solution & Answer

Answer to Problem 1SSQ

The result of these procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection is option d. has no effect on total assets.

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Justification for wrong options:

Option a.

The increase in total assets by $500 is incorrect answer because, the receipt of cash for which bad debt previously written-off has no effect on the balance sheet.

Option b.

The decrease in total assets by $500 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Option c.

The decrease in total assets by $1,000 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Justification for Correct Option:

When cash is received for bad debts previously written-off as bad debt, then the cash account is debited and accounts receivable account is credited for the same amount. As an effect of cash account will increase and accounts receivable will decrease for the same amount. Hence, this issue has no effect in the total assets.

Therefore, the correct answer is option d. has no effect on total assets.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 1SSQ

To determine

Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Expert Solution & Answer

Answer to Problem 1SSQ

The result of these procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection is option d. has no effect on total assets.

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Justification for wrong options:

Option a.

The increase in total assets by $500 is incorrect answer because, the receipt of cash for which bad debt previously written-off has no effect on the balance sheet.

Option b.

The decrease in total assets by $500 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Option c.

The decrease in total assets by $1,000 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Justification for Correct Option:

When cash is received for bad debts previously written-off as bad debt, then the cash account is debited and accounts receivable account is credited for the same amount. As an effect of cash account will increase and accounts receivable will decrease for the same amount. Hence, this issue has no effect in the total assets.

Therefore, the correct answer is option d. has no effect on total assets.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 8, Problem 1SSQ

To determine

Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Expert Solution & Answer

Answer to Problem 1SSQ

The result of these procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection is option d. has no effect on total assets.

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Justification for wrong options:

Option a.

The increase in total assets by $500 is incorrect answer because, the receipt of cash for which bad debt previously written-off has no effect on the balance sheet.

Option b.

The decrease in total assets by $500 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Option c.

The decrease in total assets by $1,000 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Justification for Correct Option:

When cash is received for bad debts previously written-off as bad debt, then the cash account is debited and accounts receivable account is credited for the same amount. As an effect of cash account will increase and accounts receivable will decrease for the same amount. Hence, this issue has no effect in the total assets.

Therefore, the correct answer is option d. has no effect on total assets.

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Answer 5

Chapter 8, Problem 1SSQ

To determine

Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Expert Solution & Answer

Answer to Problem 1SSQ

The result of these procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection is option d. has no effect on total assets.

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Justification for wrong options:

Option a.

The increase in total assets by $500 is incorrect answer because, the receipt of cash for which bad debt previously written-off has no effect on the balance sheet.

Option b.

The decrease in total assets by $500 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Option c.

The decrease in total assets by $1,000 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Justification for Correct Option:

When cash is received for bad debts previously written-off as bad debt, then the cash account is debited and accounts receivable account is credited for the same amount. As an effect of cash account will increase and accounts receivable will decrease for the same amount. Hence, this issue has no effect in the total assets.

Therefore, the correct answer is option d. has no effect on total assets.

Answer 6

Chapter 8, Problem 1SSQ

To determine

Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Expert Solution & Answer

Answer to Problem 1SSQ

The result of these procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection is option d. has no effect on total assets.

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Justification for wrong options:

Option a.

The increase in total assets by $500 is incorrect answer because, the receipt of cash for which bad debt previously written-off has no effect on the balance sheet.

Option b.

The decrease in total assets by $500 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Option c.

The decrease in total assets by $1,000 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Justification for Correct Option:

When cash is received for bad debts previously written-off as bad debt, then the cash account is debited and accounts receivable account is credited for the same amount. As an effect of cash account will increase and accounts receivable will decrease for the same amount. Hence, this issue has no effect in the total assets.

Therefore, the correct answer is option d. has no effect on total assets.

Answer 7

Chapter 8, Problem 1SSQ

To determine

Identify the result of the procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection.

Answer 8

Expert Solution & Answer

Answer to Problem 1SSQ

The result of these procedures, when the firm reinstated the account by means of a journal entry and then recorded the collection is option d. has no effect on total assets.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Justification for wrong options:

Option a.

The increase in total assets by $500 is incorrect answer because, the receipt of cash for which bad debt previously written-off has no effect on the balance sheet.

Option b.

The decrease in total assets by $500 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Option c.

The decrease in total assets by $1,000 is incorrect answer, because the receipt of cash for which bad debt previously written-off, has no effect on the balance sheet.

Justification for Correct Option:

When cash is received for bad debts previously written-off as bad debt, then the cash account is debited and accounts receivable account is credited for the same amount. As an effect of cash account will increase and accounts receivable will decrease for the same amount. Hence, this issue has no effect in the total assets.

Therefore, the correct answer is option d. has no effect on total assets.