Exercise 8-6 Prepare the journal entries on December 31, 2016, May 11, 2017, and

Question

Exercise 8-6

Prepare the journal entries on December 31, 2016, May 11, 2017, and June 12, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Date

Account Titles and Explanation

Debit

Credit

(To reinstate account previously written off)

1. On December 31, 2016, when its Allowance for Doubtful Accounts had a debit balance of $1,432, Sunland Company estimates that 9% of its accounts receivable balance of $105,900 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. 2. On May 11, 2017, Sunland Company determined that B. Jared’s account was uncollectible and wrote off $1,091. 3. On June 12, 2017, Jared paid the amount previously written off.

Explanation / Answer

S.no. DATE ACCOUNTS TITLES DR. IN $ CR. IN $ 1 31-Dec Statement of Income Dr. $10,963 Allowance for doubtful debts Cr. $10,963 (105900*9% + 1432) 2 11-May Bad debts expense Dr. $1,091 Accounts receivable Cr. $1,091 3 12-Jun Cash Account Dr. $1,091 Bad debts recovered Cr. $1,091

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