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Young Company lends Dobson Industries $30,000 on January 1, 2010, accepting a 9-month, 12% interest note. If Dobson dishonors the note and does not pay it in full at maturity but Young expects that it will eventually be able to collect the debt, which of the following entries should most likely be made by Young Company?

a.cash 30,000
notes receivable 30,000

b. note receivable 30,000
accounts receivable 30,000

c. note receivable 30,000
interest receivable 2,700
accounts receivable 32,700

d. note receivable 30,000
interest revenue 2,700

Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?

A. Bad debts expense 10,000
Allowance for doubtful accounts 10,000

B. Bad debts expense 8,000
Allowance for doubtful accounts 8,000

C. Bad debt expense 8,000
accounts receivable 8,000

D. Bad debt expense 10,000
accounts receivable 10,000

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M928019

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