Question

1) The Soft Company has provided the following information after year-end adjustments:

• Allowance for doubtful accounts was $11,000 at the beginning of the year and $30,000 at the end of the year.
• Accounts receivable were $80,000 at the beginning of the year and $420,000 at the end of the year.
• Accounts written off as uncollectible totaled $20,000.
• Net sales totaled $2,700,000.
• Sales discounts were $100,000.

What was the amount of Soft's bad debt expense for the year?

A.

$39,000.

B.

$1,000.

C.

$19,000.

D.

$20,000.

2) The Tanner Company has provided the following information after year-end adjustments:

• Allowance for doubtful accounts increased $19,000.
• Accounts receivable increased $390,000 during the year.
• Accounts written off as uncollectible totaled $20,000.
• Sales totaled $2,500,000.
• Sales discounts were $100,000.

What was the amount of Tanner's net sales?

A.	$1,990,000.

B.	$2,380,000.

C.	$2,400,000.

D.	$2,420,000.

3) Redwing Company sold inventory costing $500 to a customer on account for $700. Which of the following correctly describes the collection of $686 cash when the customer takes advantage of a sales discount?

A.	Operating expenses increase $14.

B.	Accounts receivable decreases $686.

C.	Current assets decrease $14.

D.	Gross profit is not affected.

4) One of Hawk Company's customers returned products that cost Hawk $300, which was sold on account for $450. Which of the following does notcorrectly describe the effect of the return on the financial statements?

A.	Gross profit decreases $150.

B.	Total current assets decrease $150.

C.	Sales returns and allowances increase $150.

D.	Operating expenses increase $150.

5) Merchandise was sold on credit for $10,000, terms 2/10, n/30. Which of the following journal entry descriptions correctly describes the cash collection?

A.	Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is within the discount period.

B.	Cash is debited for $10,000, accounts receivable is credited for $9,800, and sales discounts is credited for $200 if the collection is within the discount period.

C.	Cash is debited for $10,000, accounts receivable is credited for $9,800, and sales discounts is credited for $200 if the collection is after the discount period.

D.	Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is after the discount period.

Answer 1

1). Allowance for doubtful accounts increased $19,000($30,000-$11,000)

     Accounts written off as uncollectible totaled $20,000.

The amount of Soft's bad debt expense for the year is                                                                                  $39,000(19,000+20,000)

2). Tanner's net sales= Sales totaled - Sales discounts

                                  = $2,500,000 – $100,000

                                  = $2,400,000

Option c is correct answer

3). C    Current assets decrease $14.

              Cash increases $686 and accounts receivable decreases                $700. Decrease in current assets caused by discount

4). D. Operating expenses increase $150

        Because Sales returns are not operating expenses.

5). D. Cash is debited for $10000 and accounts receivable is credited for $10000 if the collection is after the discount period