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aleksley [76]
3 years ago
8

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibleA. w

ill increase net income in the period it is collected.B. will decrease net income in the period it is collected.C. does not affect net income in the period it is collected.D. requires a correcting entry for the period in which the account was written off
Business
1 answer:
Alex777 [14]3 years ago
3 0

Answer:

C. does not affect net income in the period it is collected

Explanation:

The whole point of the allowance method is to do not impact the net income when performing a write-off

When a write-off occurs the following entry is made:

allowance for doubful accounts  debit

               account receivable                credit

If the account is reversed:

account receivable         debit

   allowance for doubful account     credit

cash                    debit

   account receivable      credit

There is no revenue or expense account used in the procedure. Therefore, it does not affect net income.

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Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $158,000 Credit sale
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$8,870

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Using this formula

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6 0
3 years ago
Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Reco
kramer

Answer:

a. Account receivable and sales are understated.

Adjusting entry :

Accounts Receivable (Dr.) $21,000

Sales Revenue (Cr.) $21,000

b. Interest receivable is understated.

Adjusting Entry :

Interest Receivable (Dr.) $470

Interest Earned (Cr.) $470

c. Account receivable and sales are understated.

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Accounts Receivable (Dr.) $1,460

Sales Revenue (Cr.) $1,460

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Adjusting entries will be created for the transactions that are not properly recorded or either completely not recorded. In the given case the customer is not billed for the services rendered. This has an impact on the asset account of the company because account receivable are understated.

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