Mandy Smith's Account Was Written Off Last Year

question 10

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 receive the cash after her account has been reinstated involves:

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

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Definitions:

Price Level Expectations

Price level expectations refer to the anticipations of consumers, firms, and other economic actors regarding the future general price level in the economy, influencing their economic decisions.

Short-Run Aggregate-Supply Curve

A visual depiction that illustrates the link between the overall output of goods and services and the price level for production in the short-term.

Short-Run Economic Fluctuations

Variations in the pace of economic activity, typically characterized by changes in GDP, unemployment, and other indicators, happening over a short period.

John Maynard Keynes

A British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments, known for advocating increased government expenditures and lower taxes to stimulate demand and pull the global economy out of depression.