Use the Following Information for Questions

question 4

Multiple Choice

Use the following information for questions
Henry Co.assigned $400,000 of accounts receivable to Easy Finance Co.as security for a loan of $335,000.Easy charged a 2% commission on the amount of the loan; the interest rate on the note was 10%.During the first month, Henry collected $110,000 on assigned accounts after deducting $380 of discounts.Henry accepted returns worth $1,350 and wrote off assigned accounts totaling $2,980.
-Entries during the first month would include a

• A)debit to Cash of $110,380.
• B)debit to Bad Debt Expense of $2,980.
• C)debit to Allowance for Doubtful Accounts of $2,980.
• D)debit to Accounts Receivable of $114,710.

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Definitions:

Sales

The revenue generated from the sale of goods or services by a company during a particular period.

Unit Contribution Margin

The amount of revenue per unit sold that exceeds the variable costs involved in producing that unit.

Operating Income

Earnings before interest and taxes (EBIT), representing the profit from regular business operations.

Fixed Costs

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance.