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slega [8]
3 years ago
6

Ayayai Corp. uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,

000 and credit sales are $1,000,000. Management estimates that 4% of accounts receivable will be uncollectible.
What adjusting entry will Ayayai Corp. make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?

a. Bad Debt Expense 8,000; Allowance for Doubtful Accounts8,000
b. Bad Debt Expense 6,000; Allowance for Doubtful Accounts 6,000
c. Bad Debt Expense 6,000; Accounts Receivable 6,000
d. Bad Debt Expense 8,000; Accounts Receivable 8,000
Business
1 answer:
Ket [755]3 years ago
5 0

Answer:

Option (B) is correct.

Explanation:

Amount of which adjusting entry required:

= Amount of uncollectible accounts - Balance in Allowance for uncollectible accounts

= (Balance in accounts receivable × Estimated percentage of accounts receivable to be uncollectible) - Balance in Allowance for uncollectible accounts

= ($200,000 × 4%) - $2,000

= $8,000 - $2,000

= $6,000

Therefore, the adjusting entry is as follows:

Bad debt expense A/c      Dr.  $6,000

To Allowance for uncollectible accounts    $6,000

(To record the bad debt expense)

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Besides the actual mortgage payment, which also factors into the monthly payment on a home?
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3 years ago
An analyst needs to adjust the nominal GDP for the years 2000 and 2010 into real terms to conclude his comparison analysis. The
valentina_108 [34]

Answer:

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Explanation:

First we have to determine the real GDP using the GDP deflator.

GDP deflator = (nominal GDP / real GDP) x 100

For year 2000:

24 = ($672 billion / real GDP ) x 100

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For year 2010:

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5 0
3 years ago
Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts tot
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Answer:

The company needs to borrow $25000 and option B is the correct answer.

Explanation:

If the ending amount of cash for the year is less than the desired ending balance, then the company will need to borrow to maintain the desired level of cash balance.

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Amount need to be borrowed = 40000 - 15000  =  $25000

6 0
3 years ago
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