Answer:
Correct answer is letter B, $2,200
Explanation:
Using accrual basis method, revenue and expenses will be recognized when incurred.
The $4,800 is a 24 months policy, therefore we must compute the insurance expense applicable for the year covering from February 1 to December 31 (11 months)
An adjusting entry to recognize the expire portion of the insurance must be done at the year end in the amount of $2,200.
($4,800 / 24 months = $200 x 11 months = $2,200)
Answer:
'Bad debts write off' AND 'Recovery of Bad debts written off'
Explanation:
The Journal entry to write off a bad account affects only balance sheet accounts:
a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
No expense or loss is reported on the income statement because this write-off is "covered" under the earlier adjusting entries for estimated bad debts expense.
HOWEVER in scenario 2 where transaction involves a cashflow, it is a bad debt recovered transaction because upon recovery of bad debt previously written off
a debit to CASH and credit to Bad debts recovered account
Answer:
The first transaction should be to write-off of an uncollectible account (or bad debt), while the second transaction refers to the collection of a previously written-off bad debt.
Explanation:
The journal entry to record the write-off of an uncollectible account:
Dr Bad debt expense
Cr Allowance for uncollectible accounts
Allowance for uncollectible accounts is a contra asset account that reduces accounts receivable.
The journal entries to record the collection of a bad debt:
Dr Accounts receivable
Cr Bad debts expense
Dr Cash
Cr Accounts receivable
The collection of the previously written off bad debt increases cash flows.
Answer:
B. Union friendly
Hope this Helps!! :))
b. A cash reserve
c. Equity
d. Insurance
The answer is B - cash reserve