Woodland Company Uses the Allowance Method to Account for Bad $\quad$

question 29

Multiple Choice

Woodland Company uses the allowance method to account for bad debts.During 2009,a customer became bankrupt and a receivable of $10,000 was deemed uncollectible.Which of the following journal entries records the uncollectible account write-off?

• A) Allowance for doubtful accounts \( \quad \) \( \quad \)\(10.000\)
• \( \quad \)Accounts receivable \( \quad \) \( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\(10.000\)
• B) Bad debt expense\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)10,000
• \( \quad \)Allowance for doubtful accounts\( \quad \)\( \quad \)\( \quad \)\( \quad \)10,000
• C) Allowance for doubtful accounts\( \quad \)\( \quad \)\( \quad \)10,000
• Bad debt expense\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)\( \quad \)10,000
• D) Loss on receivables\( \quad \)\( \quad \)\( \quad \)10,000
• \( \quad \)Accounts receivables\( \quad \)\( \quad \)\( \quad \)\( \quad \)10.000

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Definitions:

Decision Tree

A graphical representation used to display decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

Expected NPV

The anticipated net present value of a project or investment, calculated using estimated inflows and outflows to assess its profitability and risk.

Cost Of Capital

The rate of return a company must offer investors to entice investment in the company, reflecting the risk of investing in the firm.

Capital Asset Pricing Model

A framework detailing how expected returns on assets, especially stocks, correlate with systematic risk.