Reference no: EM132902421

Problem 1: When a firm writes off a bad debt under the allowance method of accounting for bad debts

A) the realizable value of accounts receivable decreases

B) total net current assets will decrease

C) the cash account will decrease

D) the net realizable value of accounts receivable will not change

Problem 2: When a firm collects (recovers) an account receivable that was previously written off under the allowance method of accounting for bad debts,

A) the realizable of accounts receivable will decrease

B) the cash account will decrease by the full amount of recovery

C) the allowance amount will decrease by the amount collected

D) the realizable value of accounts receivable will increase

Problem 3: The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustment, of $450. The bad debts are estimated at 3% of $650,000, the net credit sales. After the appropriate adjusting entry for bad debts, the Allowance for Doubtful Accounts should have a credit balance of

A) $19,500

B) $19,950

C) $19,050

D) $20,400