On June 16,2018,Evergreen Company Wrote Off the $200 Receivable from Customer

question 34

Multiple Choice

On June 16,2018,Evergreen Company wrote off the $200 receivable from customer M.Simmons.On October 14,2018,Evergreen unexpectedly receives $200 cash from M.Simmons.How should Evergreen record the $200 payment from M.Simmons? Evergreen uses the allowance method.

• A) Debit Cash and credit Bad Debts Expense
• B) Debit Accounts Receivable - M. Simmons and credit Allowance for Bad Debts; debit Cash and credit Accounts Receivable - M. Simmons
• C) Debit Accounts Receivable - M. Simmons and credit Bad Debts Expense; debit Cash and credit Accounts Receivable - M. Simmons
• D) Debit Cash and credit Allowance for Bad Debts

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Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the surplus gained from an activity beyond the next best alternative.

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.

Average Total Cost

The sum of average fixed costs and average variable costs, divided by the total quantity of output, reflecting the per-unit cost of production including all expenses.

Marginal Cost

The hike in aggregate cost linked with the fabrication of one extra unit of a product or service.