X Company has the following accounting balance at the end of the year before adjustments:
Accounts receivable $50,000
Allowance for uncollectible accounts (1,000)
Net sales 100,000
Bad debts expense 0
1.The company estimates that 2% of net sales 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 $2,000 on the income statement and Allowance for uncollectible accounts will be $(3,000) on the balance sheet.
B.Bad debts expense will be $1,000 on the income statement and Allowance for uncollectible accounts will be $(2,000) on the balance sheet.
C.Bad debts expense will be $3,000 on the income statement and Allowance for uncollectible accounts will be $(2,000) on the balance sheet.
Bad debts expense will be $3,000 on the income statement and Allowance for uncollectible accounts will be $(3,000) on the income statement
2.On May 27, Ace Electronics ordered merchandice from Elmo Company, Elmo shipped the merchandise to Ace on May 31, FOB destination. The merchandise arrive at Ace's warehouse on June 2. Ace paid for the merchandise on July 1. When should Ace record the purchase?
A.May 31
B.June 2
C.July 1
D.May 27