Journal Apr.2. Sold sold was $22,050. Received$11,500 from Peking Palace Co. and
ID: 2566788 • Letter: J
Question
Journal Apr.2. Sold sold was $22,050. Received$11,500 from Peking Palace Co. and wrote off the remainder owed on the sale of April 2 as uncollectible. Reinstated the account of Peking Palace Co. that had been written off on June 9 and received $24,510 cash in full payment. June 9. Oct. 31. Journalize the above transactions in the accounts of Dining Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables. Refer to the Chart of Accounts for exact wording of account titles. Previous 741 P weda)11/8/20Explanation / Answer
Receivables include all money claims against other entities, including people, companies and other organizations.
Account Receivable is created when merchandise are sold on credit. They are classified as current assets on the balance sheet.
When customers do not pay the account receivables then the receivables are classified as uncollectible.
Two methods of accounting for uncollectible receivables are as follows:
1. Direct Write-off method: Records bad debts expense only when an account is determined to be worthless.
2. Allowance Method: Records Bad debts expense by estimating uncollectible accounts at the end of the accounting period.
Journal entries by allowance method are as shown below:
Date Particulars L.F Amount ($) Amount ($) Apr-02 Account Receivable-Peking palace Co 36,010 sales 36,010 (For merchandise sold) Apr-02 Cost of goods sold 22,050 Merchandise Inventory 22,050 (For cost of goods sold recorded) Jun-09 Cash 11,500 Allowance for doubtful accounts 24,510 Account Receivable-Peking palace Co 36,010 (for cash received and balance written off) Oct-31 Account Receivable-Peking palace Co 24,510 Allowance for doubtful accounts 24,510 (For account reinstated) Oct-31 Cash 24,510 Account Receivable-Peking palace Co 24,510 (for cash received)Related Questions
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