Mandy Smith's Account Was Written Off Last Year

question 49

Multiple Choice

Mandy Smith's account was written off last year. She owed City Company $5,000. Using the allowance method, the journal entry to reinstate her account involves:

• A)a debit to Smith's account receivable and a credit to bad-debt expense.
• B)a debit to allowance for doubtful accounts and a credit to Smith's account receivable.
• C)a debit to bad-debt expense and a credit to Smith's account receivable.
• D)a debit to Smith's account receivable and a credit to allowance for doubtful accounts.

Understand the phenomenon of groupthink and its implications in historical and contemporary contexts.

Describe attribution theory and the occurrence of attribution errors in social perception.

Analyze the role of reference groups in shaping individual behavior and self-esteem.

Explain the concept of social networks and their impact on individuals and society.

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Definitions:

Deposit Liabilities

The amounts of money that banks owe to their depositors, stemming from the bank accounts like savings, checking, and time deposits.

Federal Reserve

The central bank of the United States, responsible for setting monetary policy, supervising and regulating banks, and ensuring the stability of the financial system.

Required Reserve Ratio

The fraction of deposits that a bank is required to hold in reserve and not lend out, as mandated by a central banking authority.

Excess Reserves

The reserves that banks hold in excess of the required minimum, often held in the central bank, which can lend them out to generate interest.