On December 31, year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500
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 of accounting for uncollectible accounts. In February of year 2, on of Loudoun's customers failed to pay his $1050 account and the account was written off. On April 4, year 2, the customer paid Loudoun the $1,050.
Which of the following answers correctly states the effect of Loudoun Company's February Year 2 entry to write off the customer's account?
| Assets | = | Liab. | + | Equity | Rev. | - | Expenses | = | Net Inc. | Cash Flow |
A. | NA | = | NA | + | NA | NA | - | NA | = | NA | NA |
B. | (1,050) | = | NA | + | (1,050) | (1,050) | - | NA | = | (1,050) | NA |
C. | (1,050) | = | (1,050) | + | NA | NA | - | NA | = | NA | NA |
D. | NA | = | 1,050 | + | (1,050) |
| - | 1,050 | = | (1,050) | NA |
Multiple Choices
Option A
Option B
Option C
Option D
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella