SoTired, Incorporated, a C Corporation with a June 30 Year-End

question 116

True/False

SoTired, Incorporated, a C corporation with a June 30 year-end, elects S corporation status this year. Assuming no special elections, SoTired, Incorporated, will continue to use a June 30 year-end as an S corporation.

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Definitions:

Notes Payable

A liability on a balance sheet representing promissory notes that a company must pay in the future.

Bad Debts Expense

The operating expense account that estimates the amount of credit sales that will probably not be collectible in a given accounting period when the Allowance method is used. For the direct write-off method, this account would be the actual amount written off.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collected.

Interest Income

Income earned from investments and lending activities, including accounts receivable.