Use the following information to answer the next two questions: Harris Company uses the allowance method of handling its credit losses. It estimates credit losses at 1.5% of credit sales, which were $2,700,000 during the year. On December 31, the Accounts Receivable balance was $475,000, and the Allowance for Doubtful Accounts had a balance of $30,600 before adjustment. Indicate the effect (increase / decrease) that recording the bad debt expense for the year will have on the company's assets, liabilities, and equity, respectively. Assets Liabilities Equity Select one: a. Decrease, No Change, Decrease b. Increase, No Change, Decrease C. Increase, No Change, Increase O O d. Decrease, Decrease, No Change e. Increase, Decrease, lncrease

College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter16: Accounting For Accounts Receivable
Section: Chapter Questions
Problem 2CE: Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit...
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Use the following information to answer the next two questions: Harris
Company uses the allowance method of handling its credit losses. It estimates
credit losses at 1.5% of credit sales, which were $2,700,000 during the year. On
December 31, the Accounts Receivable balance was $475,000, and the
Allowance for Doubtful Accounts had a balance of $30,600 before adjustment.
Indicate the effect (increase / decrease) that recording the bad debt expense for
the year will have on the company's assets, liabilities, and equity, respectively.
Assets Liabilities
Equity
Select one:
a. Decrease, No Change, Decrease
b. Increase, No Change, Decrease
C. Increase, No Change, Increase
O
O d. Decrease, Decrease, No Change
e. Increase, Decrease, lncrease
Transcribed Image Text:Use the following information to answer the next two questions: Harris Company uses the allowance method of handling its credit losses. It estimates credit losses at 1.5% of credit sales, which were $2,700,000 during the year. On December 31, the Accounts Receivable balance was $475,000, and the Allowance for Doubtful Accounts had a balance of $30,600 before adjustment. Indicate the effect (increase / decrease) that recording the bad debt expense for the year will have on the company's assets, liabilities, and equity, respectively. Assets Liabilities Equity Select one: a. Decrease, No Change, Decrease b. Increase, No Change, Decrease C. Increase, No Change, Increase O O d. Decrease, Decrease, No Change e. Increase, Decrease, lncrease
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