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 = Liab. + 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

Answer 1

Answer:see attached file

Explanation: