on December 31, Year 1 the Loudoun Corporation estimated that 3% of its credit s

Question

on December 31, Year 1 the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible 10 do n es the ala a method of accounting for uncollectible accounts. In February of Year 2, one of Loudoun's customers faled to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,0S0 nce Which of the following answers correctly states the effect of Loudoun Company's February Year 2 entry to write off the customer's account? Liab NA + + + Equity Rev.ExpensesNet Ine. Cash Flow (1,050) NA NA NA B. C. (1,050) {1,OSO) NA (1,0501 NA(1,050) (1.050, = NA LA NA1,050(,0501A Mutiole Choice Option D

Explanation / Answer

Determine Effect of Loudun Company's February year-2 entry to write off the customer's Account

Journal entry for the same will be:-

Provision for Uncollectibe Debtor $1050 (Liability reduced)

To Debtor $1050 ( Asset reduced)

Hence, Option C. is correct Answer.   

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