The following transactions were completed by The Spencer Gallery during the curr

Question

The following transactions were completed by The Spencer Gallery during the current fiscal year ended December 31:

Required:

1. Record the January 1 credit balance of $42,700 in a T account (below) for Allowance for Doubtful Accounts.

2. a.Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $1,030,400 balance in accounts receivable reflects the adjustments made during the year.

Mar. 15-reinstate

  

  

  

  

Mar. 15-collection

  

  

  

  

May 20

  

  

  

  

Aug. 13

  

  

  

  

  

  

  

  

  

Sept. 2-reinstate

  

  

  

  

Sept. 2-collection

  

  

  

  

Dec. 31-write-off

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Dec. 31-adjusting

  

  

  

  

Mar. 15. Reinstated the account of Brad Atwell, which had been written off in the preceding year as uncollectible. Journalized the receipt of $2,035 cash in full payment of Brad’s account. May 20. Wrote off the $11,660 balance owed by Glory Rigging Co., which is bankrupt. Aug. 13. Received 35% of the $20,900 balance owed by Coastal Co., a bankrupt business, and wrote off the remainder as uncollectible. Sept. 2. Reinstated the account of Lorie Kidd, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,315 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Kimbro Co., $8,770; McHale Co., $2,605; Summit Furniture, $6,695; Wes Riggs, $1,895. Dec. 31. Based on an analysis of the $1,030,400 of accounts receivable, it was estimated that $44,800 will be uncollectible. Journalized the adjusting entry.

Explanation / Answer

Answer to point No. 2(a)

Date Point No JOURNAL ENTRIES Debit ($) Credit ($) 15-Mar a Account Receivable(Brad Atwell)                 2,035 Bad debt expenses                   2,035 15-Mar b Cash                 2,035 Account Receivable(Brad Atwell)                   2,035 20-May c Allowances for Account Receivable                11,660 Account Receivable                 11,660 13-Aug d Cash    Dr                 7,315 Allowances for Account Receivable Dr                13,585 Account Receivable                 20,900 2-Sep e Cash   Dr                 3,315 Bad Debt Recovered                   3,315 31-Dec f Allowances for Account Receivable Dr                19,965 Kimbro Co.,    Cr                   8,770 McHale Co    Cr                   2,605 Summit Furniture    cr                   6,695 Wes Riggs    Cr                   1,895 31-Dec g Bad debt Expenses   Dr                44,800 Allowance for Bad debt   cr                 44,800

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