During 2015, The company had the following transactions related to recievables.

Question

During 2015, The company had the following transactions related to recievables.

1.sales on account $3,700,000

2. Sales, Returns, and Allowances $ 50,000

3. Collections of Accounts Recievable 2,810,000

4. Write-offs of acciybts recievable deemed uncollectable 90,000

5. Recovery of bad debts previously written off as uncollecable 29,000

A) Prepare the Journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of AR.

B) Enter the January 1 2015 balances to the two accts (t-accounts), and determine the balances

C) prepare the journal entry to record bad debt exspense for 2015, assuming that an aging of accounts receicable indicated that expected bad debts are $115,000.

Explanation / Answer

A) Prepare the Journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of AR. Ans) Particulars Debit Credit 1) Account receivable Account Dr $        3,700,000    To Sales $                                             3,700,000 (Being Sales made on Debitors) 2) Sales Return Account Dr $              50,000    To Account receivable Account $                                                   50,000 (Being Sales return and allowances) 3) Cash Account Dr $        2,810,000       To Account receivable account) $                                             2,810,000 (Being Cash collected from the debtors) 4) Bad debtors Account Dr $              90,000     To Account receivable account $                                                   90,000 (Being writeoff of account receible ) 5) Cash Account Dr $              29,000    To Bad debtors receivable Account $                                                   29,000 (Being bad debtors received) B) Enter the January 1 2015 balances to the two accts (t-accounts), and determine the balances Account Receivable Account Particualrs Amount Particualrs Amount To Sales $        3,700,000 By Sales Return Account Dr $        50,000 By Cash Account Dr $ 2,810,000 By Bad debtors Account Dr $        90,000 By Balance amount C/D (Balances Amount) $     750,000 $        3,700,000 $ 3,700,000 Cash Account Particualrs Amount Particualrs Amount To Account receivable account $        2,810,000 To Bad debtors receivable Account $              29,000 By Balances C/d(Balacnes Amount) $ 2,839,000 $        2,839,000 $ 2,839,000 C) prepare the journal entry to record bad debt exspense for 2015, assuming that an aging of accounts receicable indicated that expected bad debts are $115,000. Bad debtors Account Dr $              25,000     To Provision for bad debtors $                                                   25,000 (Being Provision crates for bad debtors)

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