C$.$ $$480.$

D$.$ $$500.$

The Morgan Company earned $$45,000$ of revenue on account during $2009.$ There was no beginning balance in the accounts receivable and allowance accounts. During $2009$ Morgan collected $$34,000$ of cash from its receivables accounts. The company estimates that it will be unable to collect $3\%$ of its sales on account.

$12.$ The amount of bad debts expense recognized on the $2009$ income statement was

A$.$ $$1,020.$

B$.$ $$330.$

C$.$ $$1,350.$

D$.$ $$11,000.$

$13.$ Hall Company uses the allowance method to account for bad debts. An account that had been previously written$-$off as uncollectible was recovered. How would the recovery affect the company's accounting equation?

A$.$ Increase assets and increase equity.

B$.$ Increase assets and decrease liabilities.

C$.$ Reduce liabilities and increase equity.

D$.$ Have no effect on assets, liabilities or equity.

$14.$ How would accountants estimate the amount of a company's bad debts expense?

A$.$ Consider new circumstances that are anticipated to be experienced in the future.

B$.$ Compute as a percentage of credit sales.

C$.$ Consult with trade association and business associates.

D$.$ All of these.

$15.$ A company that uses the allowance method to account for bad debts

A$.$ Reports the net realizable value of its accounts receivable on the balance sheet.

B$.$ Does not record bad debts until the amount becomes significant.

C$.$ Records Bad Debts Expense when a receivable is written off.

D$.$ None of these,

$16.$ Which accounting concept can be used by some companies to justify the use of the direct write$-$off method of accounting for bad debts?

A$.$ The entity concept.

B$.$ The materiality concept.

C$.$ The going concern concept.

D$.$ The monetary principle.

$17.$ Which of the following would be classified as a tangible asset?

A$.$ Copyright.

B$.$ Goodwill.

C$.$ Iron ore deposit.

D$.$ Patent.