Jose deposits a $400 check in College Bank. The reserve requirement is 20%. Required reserves are $_____. Please choose the corr
1 answer:
Answer:
80
Explanation:
As for the required reserve balance the information is provided as follows:
Total amount deposited by Jose = $400
Provided the reserve balance = 20%
Therefore, reserve balance from this payment = $400 20% = $80.
As it is not specified clearly, that this $400 is inclusive or exclusive of the reserve balance, it is assumed that reserve will be created out of such balance.
Therefore, reserve maintained from this $400 = $80 and the rest $400 - $80 = $320 will be usable freely, without any restrictions.
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Answer and Explanation:
The Journal entry is shown below:-
a. Bad Debt Expense Dr, $36,800 ($40,000 – $3,200)
To Allowance for Doubtful Accounts $36,800
(Being the bad debt expense is recorded)
For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so the allowance for doubtful accounts is credited
b. Bad Debt Expense Dr, $40,730 ($40,000 + $730)
To Allowance for Doubtful Accounts $40,730
For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so the allowance for doubtful accounts is credited
