Gideon Company Uses the Allowance Method of Accounting for Uncollectible

question 123

Multiple Choice

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:

• A) \[\begin{array} { | l | l | l | }
• \hline \text { Accounts Receivable -A. Hopkins } & 2,000 & \\
• \hline \text { Allowance for Doubtril Accounts } & & 2,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable -A. Hopkins } & 2,000 & \\
• \hline \text { Bad debts expense } & & 2,000 \\
• \hline \text { Cash } & 2,000 & \\
• \hline \text { Accounts Receivable -A. Hopkins } & & 2,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 2,000 & \\
• \hline \text { Accounts Receivable -A. Hopkins } & & 2,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | l | }
• \hline \text { Allowance for Doubtril Accounts } & 2,000 & \\
• \hline \text { Accounts Receivable - A Hopkins } & & 2,000 \\
• \hline
• \end{array}\]
• E) \[\begin{array} { | l | r | r | }
• \hline \text { Allowance for Doubtrul Accounts } & 2,000 & \\
• \hline \text { Bad debts expense } & & 2,000 \\
• \hline
• \end{array}\]

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Definitions:

Divisible Contract

A contract that includes multiple agreements or parts, which can be separated so that the failure to perform one part does not necessarily breach the entire contract.

Implied-In-Fact Condition

A legal concept where the obligations or conditions of a contract are not explicitly stated but can be inferred from the nature of the agreement and the actions of the parties involved.

Express Condition

A provision in a contract that must be met as a prerequisite for performance or fulfillment of the contract terms.

Anticipatory Repudiated

Anticipatory Repudiation occurs when one party to a contract indicates they will not fulfill their contractual obligations before they are due to perform.