22. During 20X2, Lozier Inc, had credit sales of $2,600,000 and 80 percent of th

Question

22. During 20X2, Lozier Inc, had credit sales of $2,600,000 and 80 percent of the credit sales was collected in cash. The company estimated that 2 percent of the credit sales would be uncollectible. During the next year, 20X3, one of Lozier's credit customers, EI Cajon Company, with an account balance of $3,500, was judged to be uncollectible and written off Prepare the necessary journal entries to record a. The credit sales during 20X2. b. The collection of cash from credit sales during 20X2 c. The bad d. The write-off of the EI Cajon account in 20X3. debts expense esitmate for 20x2.

Explanation / Answer

S No Year Account Debit Credit a 2002 Accounts receivables 2,600,000 Sales 2,600,000 [Credit sales recorded] b 2002 Cash 2,080,000 Accounts receivables 2,080,000 [80% of credit sales collected] c 2002 Bad debt expense 52,000 Allowance for doubtful debts 52,000 [Estimated uncollectible accounts expense recorded, 2600000*2%= 52000] d 2003 Allowance for doubtful debts 3,500 Accounts receivables 3,500 [ E1 Cajon account judged bad and written off]

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