1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Zielflug [23.3K]
3 years ago
8

Determining Financial Statement Effects of Write-Offs and Bad Debt Expense Using the Allowance Method

Business
2 answers:
Ket [755]3 years ago
8 0

Answer:

Assets =Liabilities +  Stockholders Equity

-8000=                                           - 8000

Explanation:

Allowance for Doubtful  Debts $10,000

Bad debt expense $8,000

Assets =Liabilities +  Stockholders Equity

-8000=                                           - 8000

The write off does not affect the realizable value of accounts receivable. Neither total assets nor net income is affected by the write off a specific account.Instead both assets and net income are affected in the period when bad debts expense is predicted and recorded with an adjusting entry.

uysha [10]3 years ago
4 0

Answer: Please see the analysis below

Explanation: The following are the financial statement effects

                                  Assets Liabilities Stockholders Equity Income Expense

Write-off of $10,000     -           -                   Nil                           Nil         Nil

Bad debt of $8,000     -           +                   -                                -             +

  • Write-off of customer balances of $10,000 would lead to reduction in assets and also reduction in liabilities (since the provision for doubtful accounts reports to liabilities but mapped to the accounts receivable to show the net amount). Here, we have assumed that there is an existing allowance for doubtful accounts that has $10,000 buffer or more. If the write-off was not initially provided for, it would hit expense by debiting bad debt expense and crediting the accounts receivable. <em>Its effects are therefore decrease in asset, decrease in liabilities.</em>
  • Bad debt expense of $8,000 affects the expense and the liabilities/assets. Journal entries to record the bad debt expense is Debit Bad debt expense $8,000; Credit Allowance for doubtful accounts $8,000. So, it affects the expense, liabilities and ultimately the assets (allowance for doubtful accounts is a contra to the accounts receivable). <em>Its effects are increase in expense, increase in liabilities, decrease in stockholders equity, decrease in income and decrease in assets</em>
You might be interested in
The basis for Durkheim's theory of society is the principle that Select one: a. people are the products of their social environm
Molodets [167]

Answer:

a. People are the products of their social environment.

Explanation:

The basis for Durkheim's theory of society is the principle that people are  the products of their social environments. around them. Emile Durkheim is a well known sociologist  and developed lots of social structure theories, which includes the Division of labor, Anomie and Functionalism. The theories of Emile Durkheim's  were founded on the concept of social facts, defined as the norms, values, and structures of society.

4 0
3 years ago
Hi-Tech, Inc., reports net income of $65.0 million. Included in that number are depreciation expense of $5.5 million and a loss
Greeley [361]

Answer:

Net Cash Flows from operating activities is $68.5 million.

Explanation:

The indirect Method would be used here because all we will find the cash expenses and revenues that were converted into within the year and are reported in the income statement by calculating the increase and decrease in the current assets and current liabilities. Here we will also eliminate the non cash expense effects by adding them back.

The net cash flows from operating activities can be calculated using the following method:

                                                                 Millions

1. Net Income                                                65

<u>Add Non Cash Deductions</u>

2. Depreciation                                             5.5

3. Loss on sale of Equipment                       1.5

<u>Add / (Less) the increase or </u>

<u>decrease in current Assets or </u>

<u>liabilities</u>

4. Increase in Trade Receivables                (2.5)

5. Increase in Trade Payables                      3.5

6. Increase in inventory                               <u> (4.5) </u>

Net Cash Flows from operating activities $68.5

4 0
3 years ago
Answer ASAPWhich of the following is not a part of your credit report?
Sunny_sXe [5.5K]
C hopefully this helps
6 0
2 years ago
The shareholders’ equity of Tru Corporation includes $540,000 of $1 par common stock and $1,140,000 par of 7% cumulative preferr
Dmitry_Shevchenko [17]

Answer:

$12,600

Explanation:

Annual Dividend to preferred stock = $1,140,000 × 7%

                                                           =  $79,800

A schedule of preferred stock dividend in Arrears is as follows :

               Dividend              Paid                Arrears

2016        $79,800           $54,000           $25,800

2017        $79,800           $54,000           $51,600

2018        $79,800           $131,400                 0

Dividends of $131,400 has to be paid in 2018 to cover all the arrears.

Principle : Preference dividends (and their arrears if cumulative) are paid first before dividends distribution to common stock holders.

Common Stock Holders receive the remaining amount of dividends of $12,600 ($144,000 - $131,400)

7 0
3 years ago
Timothy is a construction worker in one of the leading firms of a city. His employment contract includes a clause that says he c
podryga [215]

Answer:

A clause that says Timothy (A construction worker) cannot work as a construction worker within the city for fifteen years once he leaves the company  is Legal because the employer can add any constraint to the agreement.

Explanation:

The provisions of employment contracts usually include an explanation of compensation, penalties and in peculiar cases post-employment clause.

Post-employment clause usually comes with additional benefits like payment of severance.

Enforcing an employment contract varies according to state laws. For this reason, before entering into a written employment contract, clean employee has to be clear on the terms and provisions of the contract because once you append your signature to any provision stipulated by the employer in the contract, it is binding.

Post-employment restrictive covenants are only useful to the employer if they can be enforced. Continued payment of severance often provides the employer with leverage when trying to enforce restrictive covenants in an employer's contract.  

Generally, the employer and employee must be in compliance with the employment contract.

5 0
3 years ago
Other questions:
  • Your small remodeling business has two work vehicles. One is a small passenger car used for job site visits and for other genera
    15·1 answer
  • Getaway Travel Company reported net income for 2016 in the amount of $50,000. During 2016, Getaway declared and paid $2,000 in c
    9·1 answer
  • Only you can open your safety deposit box. True False
    10·2 answers
  • The following items were among those reported on Lee Co.'s Income Statement for the year ended December 31, 20x5:
    11·1 answer
  • Paolucci Corporation's relevant range of activity is 8,400 units to 17,000 units. When it produces and sells 12,700 units, its a
    9·1 answer
  • Two references are made to a check early on in the play, one by walter and one by travis. how does ruth react to each of these r
    10·1 answer
  • Susan’s customers are always concerned about what they are receiving in exchange for what they are paying. They are concerned ab
    7·1 answer
  • A company is designing a product layout for a new product. It plans to use this production line eight hours a day in order to me
    6·1 answer
  • 1. Most financial crises in the United States have begun with A. a steep stock market decline. B. an increase in uncertainty res
    7·1 answer
  • The epa has recently set a strict policy of monitoring the total maximum daily load (tmdl) of nutrients in order to reverse eutr
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!