On December 31, Year 1, the Loudoun Corporation estimated th…
On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun uses the allowance method. On February 15, Year 2, one of Loudoun’s customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050.Which of the following correctly states the effect of Loudoun Company writing off the customer’s account? Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders’ EquityCash+Net Realizable Value=Accounts Payable+Common Stock+Retained EarningsRevenue−Expense=Net Incomea. + = + + − = b. +(1,050)= + +(1,050)(1,050)− =(1,050) c. +(1,050)=(1,050)+ + − = d. + =1,050+(1,050)+ −1,050=(1,050)