Question

Use the following information about Yak Corporation to answer the next four questions.

The Accounts Receivable balance for Yak Corporation is $82,000 at October 31, 2020. Before calculating and recording October 2020 bad debt expense, the Allowance for Doubtful Accounts has a debit balance of $3,000. Sales for the month are $950,000. An aging of accounts receivable results in a $17,200 estimate for the Allowance for Doubtful Accounts as of October 31, 2020. In the past several years, 2% of sales have proven uncollectible.   

1. If Yak uses the percent of sales method, Bad Debt Expense on the October 2020 Income Statement will be:  
   1. $16,000.
   2. $17,200.
   3. $19,000.
   4. $20,200.

2. If Yak uses the percent of sales method, the Allowance for Doubtful Accounts reflected on the October 31, 2020 Balance Sheet will be:  
   1. $16,000.
   2. $17,200.
   3. $19,000.
   4. $20,200.

3. If Yak uses the analysis of receivables method, Bad Debt Expense on the October 2020 Income Statement will be:  
   1. $16,000.
   2. $17,200.
   3. $19,000.
   4. $20,200.

4. If Yak uses the analysis of receivables method, the Allowance for Doubtful Accounts reflected on the October 31, 2020 Balance Sheet will be:  
   1. $16,000.
   2. $17,200.
   3. $19,000.
   4. $20,200.

Answer 1

The answer has been presneted in the supporting sheet.