Question

43. An aging of a company's accounts receivable indicates that $13,000 is estimated to be uncollectible. If the Allowance for Doubtful Accounts has a $2,400 debit balance before adjustment, the adjustment to record bad debts for the period will require a

Question 43 options:

	debit to Bad Debts Expense for $15,400.
	debit to Bad Debts Expense for $13,000.
	debit to Bad Debts Expense for $10,600.
	debit to Allowance for Doubtful Accounts for $13,000.
	none of the above.

44. Fantastic Fashions has just completed its first quarter of operations. Assume that Fantastic Fashions adjusts its book quarterly. Below are transactions that have not yet been recorded.

Jan 1 Made cash sales of $75,000 before tax. HST is collected on all sales at a rate of 13%.

Jan 15 Signed a six month note for $12,000 to extend amounts owing on account to Trendy Taste Inc. Interest is 6% annually and due at maturity.

Mar 1 Received the annual property tax bill for $7,500 payable on Apr 30.

Apr 1 Paid gross salaries of $10,000; of this amount $495 is CPP, $178 is EI and $3,465 is for income taxes.

Apr 30 Paid the property taxes bill in full.

The journal entry for Fantastic Fashions to record the note signed on Jan 15 is

Question 44 options:

Notes Payable—Trendy Taste Inc			12,000
	Accounts Payable—Trendy Taste Inc.			12,000

Accounts Payable—Trendy Taste Inc			12,720
	Notes Payable—Trendy Taste Inc.			12,720

Accounts Payable—Trendy Taste Inc			12,000
	Notes Payable—Trendy Taste Inc.			12,000

Notes Payable—Trendy Taste Inc			12,180
	Accounts Payable—Trendy Taste Inc.			12,180

None of the above

46. CRX Inc. issues a $20,000, 9%, 3-month note receivable on December 1, with interest due at maturity. The Company has a December 31^st year-end. When payment is received, the entry includes a credit to Interest Revenue in the amount of

Question 46 options:

	$     150.
	$     300.
	$     450.
	$20,450.
	None of the above

49.The carrying amount of Accounts Receivable is $17,500 before the write off of a $2,500 account. Assuming the allowance method is used,” what is the carrying amount of the Accounts Receivable after the write off?

Question 49 options:

	$20,000.
	$17,500.
	$15,000.
	$2,500.
	None of the above

Answer 1

43
Bad debts expense	15400	=13000+2400
debit to Bad Debts Expense for $15,400.
Option A is correct
44
Accounts Payable—Trendy Taste Inc	12000
Notes Payable—Trendy Taste Inc.		12000
Option C is correct
45
Credit to Interest Revenue	300	=20000*9%*2/12
Option B $300 is correct
46
Under the allowance method,write off of an account does not affect carrying amount
Carrying amount of the Accounts Receivable	17500
Option B $17,500 is correct