QUESTION 15

Under the allowance method with a normal credit balance in the Allowance for Doubtful Accounts, when an account receivable is written off,

		the cash (net) realizable value of the accounts receivable account is unchanged.
		bad debt expense increases.
		the customer's account must be restored and then cash collected.
		none of the above.

QUESTION 16

How is the balance sheet linked to the other financial statements?

		There is no link between the balance sheet and the other statements.
		Retained earnings is added to total assets and reported on the balance sheet.
		Net income increases retained earnings on the statement of retained earnings, which ultimately increases retained earnings on the balance sheet.
		The beginning retained earnings balance on the statement of retained earnings becomes the amount of retained earnings reported on the balance sheet.

QUESTION 17

Entity D purchased equipment at a cost of $500,000 in January 2022. As of January 1, 2026, depreciation of $120,000 had been recorded on this equipment. Depreciation expense for 2026 is $30,000. After the adjustments are recorded and posted on December 31, 2026, what are the balances for the Equipment and Accumulated Depreciation? Equipment; Accumulated Depreciation

		$500,000; $ 30,000
		$350,000; $ -0-
		$120,000; $ 30,000
		$500,000; $150,000