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, 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 answers correctly states the effect of recording the collection of the reestablished receivable on April 4, Year 2?
| Assets | = | Lab. | + | 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 | | 1,050 | OA |
C. | 1,050 | | = | NA | + | 1,050 | | NA | | − | (1,050 | ) | = | 1,050 | | 1,050 | OA |
D. | NA | | = | NA | + | NA | | NA | | − | NA | | = | NA | | 1,050 | OA |
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Multiple Choice
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