Author Question: One negativeeffect of carrying too much inventory is risk that customers will change their buying ... (Read 76 times)

tiara099 · **on:** Jul 5, 2018

One negativeeffect of carrying too much inventory is risk that customers will change their buying habits.
a. True
b. False

Indicate whether the statement is true or false

Question 2

Y Company has the following accounting balances at the end of the year before adjustments:

Accounts receivable 25,000
Allowance for uncollectible accounts (1,000)
Net sales 200,000
Bad debts expense 0

The company estimates that 20 of accounts receivable will be uncollectible. After the correct adjusting entry has been made, which of the following is correct about Bad debts expense for the year and Allowance for uncollectible accounts at the end of the year?
A) Bad debts expense will be 4,000 on the income statement and Allowance for uncollectible accounts will be (5,000) on the balance sheet.
B) Bad debts expense will be 4,000 on the income statement and Allowance for uncollectible accounts will be (4,000) on the balance sheet.
C) Bad debts expense will be 5,000 on the balance sheet and Allowance for uncollectible accounts will be (5,000) on the income statement.
D) Bad debts expense will be 5,000 on the income statement and Allowance for uncollectible accounts will be (5,000) on the balance sheet.