27. An aging of a company\'s accounts receivable indicates that $4,500 are estim
ID: 2496486 • Letter: 2
Question
27. An aging of a company's accounts receivable indicates that $4,500 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a
a. debit to Bad Debt Expense for $4,500.
b. debit to Bad Debt Expense for $6,100.
c. debit to Bad Debt Expense for $2,900.
d. credit to Allowance for Doubtful Accounts for $4,500.
28. Doane Company receives a $7,000, 3-month, 6% promissory note from Ray Company in settlement of an open accounts receivable. What entry will Doane Company make upon receiving the note?
a. Notes Receivable 7,035
Accounts Receivable—Ray Company 7,035
b. Notes Receivable 7,105
Accounts Receivable—Ray Company 7,000
Interest Revenue 105
c. Notes Receivable 7,000
Interest Receivable 105
Accounts Receivable—Ray Company 7,000
Interest Revenue 105
d. Notes Receivable 7,000
Accounts Receivable—Ray Company 7,000
Explanation / Answer
27.
Total uncollectible amount is $ 4,500; already debited $ 1,600
Therefore, amount to be debited as bad ebt expense is $ 2,900 ($4,500 - $1,600). Hence, option c is correct.
28.
Notes Receivable 7,000
Accounts Receivable—Ray Company 7,000
Option d is correct.
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