Quiz Chapter 8.docx

Quiz Chapter 8.docx - 1 The account Allowance for Doubtful...

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1) The account Allowance for Doubtful Accounts is classified as a(n) contra account to Accounts Receivable. 2) An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 debit balance, the adjustment to record bad debts for the period will require a debit to Bad Debts Expense for $2,800. 3) Manning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Manning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment? DR Bad Debt Expense $8000 CR Allowance for Doubtful Accounts 8000 4) Light Co. holds Dark Inc.'s $20,000, 4-month, 9% note. The entry made by Light Co. when the note is collected, assuming no interest has previously been accrued is: Cash $20,600 Notes Receivable 20,000 Interest Receivable 600 5)
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