Question

1. A restaurant purchased kitchen equipment on Jan 1, 2016 for $40,000. It is estimated that the equipment will have a $4,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31,

$3,000

$3,300

$3,600

$4,000

2. Two methods of writing-off accounts receivable are the

allowance method and the accrual method

allowance method and the net realizable method

direct write-off method and the accrual method

direct write-off method and the allowance method

3. An aging of a company’s accounts receivable indicates that $8,000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,000 credit balance, the adjustment to record bad debts for the period will require a

Debit to Provision for Doubtful Accounts for $8,000

Debit to Allowance for Doubtful Accounts for $8,000

Credit to Provision for Doubtful Accounts for $6,000

Credit to Allowance for Doubtful Accounts for $6,000

4. Allowance for Doubtful Accounts

is offset against current liabilities

increases the cash realizable value of accounts receivable

appears on the balance sheet

is offset against accumulated depreciation

Answer 1