Exercise 8-3 At the beginning of the current period, Sunland Company had balance

Question

Exercise 8-3 At the beginning of the current period, Sunland Company had balances in Accounts Receivable of $201,700 and in Allowance for Doubtful Accounts of $9,590 (credit). During the period, it had net credit sales of $875,700 and collections of $796,820. It wrote off as uncollectible accounts receivable of $7,410. However, a $2,808 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $25,830 at the end of the period. (Omit cost of goods sold entries.) (a) Prepare the entries to record sales and collections during the period. (b) Prepare the entry to record the write-off of uncollectible accounts during the period. (c) Prepare the entries to record the recovery of the uncollectible account during the period. (d) Prepare the entry to record bad debt expense for the period. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (To record sales)

Explanation / Answer

1)

**Bad debt expense =estimated uncollectible account -Beginning+write off - reinstated accounts

      = 25830-9590+7410-2808

b)Ending balance in accounts receivable =Beginning+sales -collection-write off +reinstated

     = 201700+875700-[796820+2808]-7410+2808

       = 273170

Ending balance in allowance account : 25830

c)Net realizable value :Accounts receivable -allowance for doubtful account

      = 273170-25830

     = $ 247340

No. Account debit credit a Accounts receivable 875700 Sales revenue 875700 [to record credit sales] cash 796820 Accounts receivable 796820 b Allowance for doubtful account 7410 Accounts receivable 7410 [Account written off] c Accounts receivable 2808 Allowance for doubtful account 2808 [Accounts written off reinstated] cash 2808 Accounts receivable 2808 d Bad debt expense 20842 Allowance for doubtful account 20842 [Bad debt expense recorded for the period]

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