Reference no: EM132661357

Problem 1: At the beginning of the year, the balance of accounts receivable was $200,000 and the balance of allowance for doubtful debts was $12,000. During the year, $500 bad debt had been written off. What would be the effect of the bad debt write-off on the recoverable amount in the statement of financial position (Ignore GST)?

Select one:

a. The recoverable amount would decrease by $500
b. The recoverable amount would increase by $500
c. The recoverable amount would remain the same
d. The effect on recoverable amount could not be determined

Problem 2: Allowance for Doubtful Debts is

Select one:

a. An expense account
b. A contra asset account
c. A liability account
d. An asset account

Problem 3: A cheque issued by John Ltd for $690 was incorrectly journalised by the company for $960. The appropriate treatment on the bank reconciliation for John Ltd would be to

Select one:

a. deduct $270 from Balance as per cash book
b. add $270 to Balance as per bank
c. deduct $270 from Balance as per bank
d. add $270 to Balance as per cash book