Solution_Chpt06 - Chapter 06 1. b) 2. b) 3. b) 4. d) 5. c)...

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Unformatted text preview: Chapter 06 1. b) 2. b) 3. b) 4. d) 5. c) 6. c) 7. d) 8. b) 9. d) 10. c) 6. An account receivable is an amount owed to the business on open account by a trade customer for merchandise or services purchased. In contrast, a note receivable is a short-term obligation owed to the company based on a formal written document. 7. In conformity with the matching principle, the allowance method records bad debt expense in the same period in which the credit was granted and the sale was made. 8. Using the allowance method, bad debt expense is recognized in the period in which the sale related to the uncollectible account was recorded. 9. The write-off of bad debts using the allowance method decreases the asset accounts receivable and the contra-asset allowance for doubtful accounts by the same amount. As a consequence, (a) net income is unaffected and (b) accounts receivable, net, is unaffected. E62. Sales revenue ($2,000 + $7,000 +$5,000)................................. $14,000 Less: Sales discounts ($7,000 collected from S x 3%)............. 210 Less: Credit card discounts ($2,000 from R x 2%).................... 40 Net sales..................................................................................... $13,750 E63. Sales revenue ($350 + $4,500 + $9,000)................................... $13,850 Less: Sales returns and allowances ( 1 / 10 x $9,000 from D)........ 900 Less: Sales discounts ( 9 / 10 x $9,000 from D x 3%)..................... 243 Less: Credit card discounts ($350 from B x 2%)........................ 7 Net sales..................................................................................... $12,700 E68....
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Solution_Chpt06 - Chapter 06 1. b) 2. b) 3. b) 4. d) 5. c)...

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