Reference no: EM132797404

Problem 1: Which of the following is not true about the Allowance for Doubtful Accounts?

Option 1: It is a contra asset account.
Option 2: It is used instead of reducing accounts receivable directly.
Option 3: It is debited when uncollectible accounts are written off.
Option 4: It is a liability account.
Option 5: It is credited when bad debts expense is estimated and recorded.

Problem 2: MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made. The journal entry to record this sale transaction would be:

Option 1: Debit Cash of $300 and credit Sales $300.
Option 2: Debit Cash of $300 and credit Accounts Receivable $300.
Option 3: Debit Accounts Receivable $300 and credit Sales $300.
Option 4: Debit Cash $295.50; debit Credit Card Expense $4.50 and credit Sales $300.
Option 5: Debit Cash $295.50 and credit Sales $295.50.