Your company prepares financial statements only once a year. In accounting for u

Question

Your company prepares financial statements only once a year. In accounting for uncollectible accounts it uses the allowance method. For the most recent year give general journal entries for the following.

Beginning of the year balances:(No journal entries needed for beg. Balances)

Accounts Receivable 256,200

Allowance for uncollectible accounts 6,250

Uncollectible Accounts Expense -

1 Sales for the year were 1,585,000. 70% of sales are credit sales

2 Collection on credit sales for the year were 1,070,000

3 Wrote off 10500 of specific customer accounts

4a At year end estimate uncollectible accts to be 1.75% of credit sales

4b Instead of 4a, the company ages it receivables and estimated 7500 as uncollectible

Explanation / Answer

Journal entry

Account Debit Credit Account receivbale 1 1109500 cash 475500 Sale 1585000 Cash 2 1070000 Account receivable 1070000 Bad Debts 3 10500 Account Receivable 10500 Bad debts 4a 19416.25 provision of bad debts 19416.25 bad debts 4b 1250 provision for bad debts 1250

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