Ace Computing Company on January 1, the Accounts Receivable and the Allowance for the Allowance

question 43

Multiple Choice

Ace Computing Company
On January 1, the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $40,000 and $1,500 respectively. During the year, the company reported $80,000 of credit sales. There were $500 of receivables written off as uncollected during the year. Cash collections of receivables amounted to $78,200. The company estimates that it will be unable to collect 4% of the year-end accounts receivable balance.
-Refer to the Ace Computing Company. The entry to recognize the write-off of the specific uncollected accounts will act to

• A)increase total assets and stockholders' equity.
• B)increase total assets and decrease stockholders' equity.
• C)decrease total assets and stockholders' equity.
• D)not affect total assets or stockholders' equity.

---

Definitions:

Plantwide Factory Overhead Rates

A single overhead rate calculated by dividing total factory overhead costs by a base, applied uniformly across all products regardless of department.

Plantwide Factory Overhead Rate

A single rate used to allocate all of a factory's indirect costs to its production activities, typically based on machine hours or labor hours.

Product Costs

Costs that are directly attributed to the creation of a product, including direct labor, direct materials, and manufacturing overhead.

Production Departments

Specific areas or units within a manufacturing facility where the actual production or assembly of goods takes place.