Your Company Wrote Off $350 in Accounts Receivable Two Months

question 71

Multiple Choice

Your company wrote off $350 in accounts receivable two months ago when a customer went bankrupt. That customer reorganizes and now pays the $350. Your company should:

• A) debit Bad Debt Expense and credit Cash.
• B) debit Accounts Receivable and credit Bad Debt Expense and then debit Allowance for Doubtful Accounts and credit Cash.
• C) debit Cash and credit Bad Debt Expense.
• D) debit Accounts Receivable and credit Allowance for Doubtful Accounts and then debit Cash and credit

Recognize the accounting implications of share transactions and treasury stock.

Comprehend the legal and financial distinctions between common and preferred stock.

Identify the corporate governance structure and roles of key officers.

Understand the concept of limited liability in the corporate form.

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Definitions:

Transaction

An agreement or exchange between two parties that involves the selling, buying, or trading of goods, services, or information.

Holiday Turkeys

Generally refers to the practice of giving turkeys to employees during the holiday season, which may have tax implications depending on the value and method of distribution.

Employees' Income

The compensation received by individuals for their services performed for employers, including wages, salaries, bonuses, and commissions.

Original Issue Discount

The difference between the face value and the actual issue price of a bond, representing additional interest income over the bond's life.