P9-36B Dialex Watches completed the following transactions during 2007 and 2008:
ID: 2555193 • Letter: P
Question
P9-36B Dialex Watches completed the following transactions during 2007 and 2008: 2007 Estimated that uncollectible-account experse for the year was 1% on credit sales of $400,000, and recorded that amount as expense. Use the allowance method. Dec. 31 31 Made the closing entry for uncollectible-account expense. 2008 Jan. 17 June 29 Aug. Sold inventory to Mitch Vanez, $600, on account. Ignore cost of goods sold. Wrote off the Mitch Vanez account as uncollectible after repeated efforts to collect from him. Received $600 from Mitch Vanez, along with a letter stating his apology for paying late. Reinstated Vanez's account in full and recorded the cash collection 6 Made a compound entry to write off the following accounts as uncollectible: Bernard Klaus, $1,700; Marie Monet, $1,300. Dec. 31 2008 Estimated that uncollectible-account expense for the year was 1% on credit sales of $480,000, and recorded that amount as expense. Made the closing entry for uncollecti Dec. 31 31 Requirements 1. Open general ledger accounts for Allowance for Uncollectible 2. Record the transactions in the general journal, and post to the 3. The December 31, 2008, balance of Accounts Receivable is Accounts and Uncollectible-Account Expense. Keep running bal- ances. All accounts begin with a zero balance. (pp. 80, 468) two ledger accounts. (pp. 460-464, 205) 139,000. Show how Accounts Receivable would be reported on the balance sheet at that date. Use the first reporting format at the top of page 461Explanation / Answer
Allowance from Uncollectable accounts
Date
Particulars
Amount
Date
Particulars
Amount
31 Dec 07
To Balance C/f
$4,000
31 Dec 07
By Uncollectible account expenses
$4,000
Total
$4,000
$4,000
31 Dec 08
To balance C/f
$8,800
1 Jan 2008
To balance B/d
$4,000
31 Dec 08
By Uncollectible account expenses
$4,800
Total
$8,800
$8,800
Date
Particular
Date
Particular
Amount
31 Dec 07
To Allowance from uncollectable
$4,000
31 Dec 07
By Profit and loss account
$4000
Total
$4,000
$4000
29 Jun 08
To Mitch Vanez
$600
6 Aug 2008
To Uncollectable account recovered
$600
31 Dec 08
To Bernard Klaus
$1,700
31 Dec 08
By Profit and loss account
$7,800
31 Dec 08
To Marie Monet
$1,300
31 Dec 08
To Allowance from uncollectable
$4,800
Total
$7,800
$7,800
Uncollectable account expense
Journal Entry
17 Jan 2008 Mitch Vanez A/c Dr $600
To Sales $600
(Being Inventory sold)
29 Jun 2008 Uncollectable account expense $600
To Mitch Vanez $600
(Being Amount written off)
6 Aug 2008 Uncollectable account expense A/c Dr $600
To Uncollectable account recovered $600
(Being Amount recovered)
31 Dec 2008 Uncollectable account expense $600
To Bernard Klaus $1700
To Marie Monet $1300
(Being Amount written off)
Balance Sheet Extract to show Account receivable
Account Receivable $139,000
Less: Allowance from
Uncollectable accounts ($8,800)
$1,30,200
Date
Particulars
Amount
Date
Particulars
Amount
31 Dec 07
To Balance C/f
$4,000
31 Dec 07
By Uncollectible account expenses
$4,000
Total
$4,000
$4,000
31 Dec 08
To balance C/f
$8,800
1 Jan 2008
To balance B/d
$4,000
31 Dec 08
By Uncollectible account expenses
$4,800
Total
$8,800
$8,800
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