Use this information for questions 21-24: On December 31, 2014, the Landon Corpo

Question

Use this information for questions 21-24:
On December 31, 2014, the Landon Corporation estimated that 3% of its credit sales of $215,000 would be uncollectible. Landon used the allowance method of accounting for uncollectible accounts. On February 15, 2015, Landon wrote off the account of one of its customers, in the amount of $2,500. On April 7, 2015, the customer paid the account in full.

Question 24 options:

Option A

Option B

Option C

Option D

Option A

Option B

Option C

Option D

Assets LiabilitiesEquity RevenueExpensesNet Inc. Cash A) B) C) D) 2,500 NA (2,500) NA NA NA NA (2,500) NA (2,500(2,500) 2,5002,500 2,500 2,500NA NA NA NA 2,500 2,500 OA NA 2,500 OA 2,500) (2,500)OA 2,500 NA NA

Explanation / Answer

Solution: Option B

Working:

Assets = Liabilities + Equity Revenue - Expenses = Net Inc. Cash

na = na+na na – na = na na ; Under the allowance method none of these accounts will be affected

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