At January 1, 2016, Hilly Mountain Flagpoles had Accounts Receivable of $31,000,

Question

At January 1, 2016, Hilly Mountain Flagpoles had Accounts Receivable of $31,000, and Allowance for Bad Debts had a credit balance of $3,000. During the year, Hilly Mountain Flagpoles recorded the following:

Sales of $174,000 ($157,000 on account; $17,000 for cash). Ignore Cost of Goods Sold.

Collections on account, $131,000.

Write-offs of uncollectible receivables, $2,200.

2. AR, Dec. 31 $54,800

Requirements:

   1.Journalize Hilly’s transactions that occurred during 2016. The company uses the allowance method.

   2.Post Hilly’s transactions to the Accounts Receivable and Allowance for Bad Debts T-accounts.

3.Journalize Hilly’s adjustment to record bad debts expense assuming Hilly estimates bad debts as 4% of credit sales. Post the adjustment to the appropriate T-accounts.

4.Show how Hilly Mountain Flagpoles will report net accounts receivable on its December 31, 2016, balance sheet.

Explanation / Answer

Answer:1 journal entry:

Account Receivable A/C Dr. $157000

   To Sales A/C                                 $157000

Cash A/C Dr. $17000

To Sale A/C           $17000

Cash A/C Dr. $131000

   To Account Receivable A/C     $131000

Uncollectible Account Expense A/C Dr. $2200

     To Account Receivable A/C                        $2200

Answer:2

Answer:3

Bad debts A/C Dr. $6280

    To Allowance for bad debts A/C     $6280 (157000*4%)

Answer:4

Account Receivable A/C Particulars Amount ($) Particulars Amount ($) To bal b/d 31000 by cash 131000 To sales 157000 by uncollectible account 2200 By bal c/d 54800 Allowance for Bad Debts Particulars Amount ($) Particulars Amount ($) To Account receivable 2200 By Bal b/d 3000 To bal c/d 800

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