Consider This T-Account for Your Bank, Which Shows That You

question 40

Multiple Choice

Consider this T-account for your bank, which shows that you deposited $100 into your checking account and that your bank then made a $75 loan to Michelle. $$\begin{array} { l l } \text { Assets } & \text { Liabilities } \\+ \$ 100 \text { (cash) } & + \$ 100 \text { (increase in your checking account) } \\+ \$ 75 \text { (loan to Michelle) } & + \$ 75 \text { (increase in Michelle's checking account) }\end{array}$$ Your bank's reserve ratio is:

• A) 57.14%
• B) 75%
• C) 125%.
• D) 42.8%.

Understand and explain the effects of writing off accounts receivable on the accounting equation under the direct write-off method.

Distinguish between the various methods used for estimating uncollectible accounts.

Recognize the impact of uncollectible accounts on net realizable value and bad debt expense.

Calculate the net realizable value of accounts receivable and adjustments for bad debt expense.

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Definitions:

Atomic Symbol

A one- or two-letter representation of an element derived from its English or Latin name.

Mercury

A heavy, silvery d-block element that is liquid at standard conditions for temperature and pressure, used in thermometers, barometers, and other devices.

Atomic Symbol

A one or two-letter abbreviation derived from the English or Latin name of an element, representing it in the periodic table.