A custom furniture company made credit sales of $840,000 in 20X1 to 100 customer

Question

A custom furniture company made credit sales of $840,000 in 20X1 to 100 customers s5,00; Cerruti,$7,000; others, s828,00. Total collections during 20X1 were $760,000 including $5,000 from Cerruti, but nothing was collected from Ferrara. At the end of 20X1, an allowance for uncollectible accounts was provided of 2.5% of credit sales. 20X1 is the company's first year of operations. 1. Set up general ledger accounts for Accounts Receivable, Allowance for Uncollectible Accounts, and Bad Debt Expense plus a subsidiary ledger for Accounts Receivable. The subsidiary ledger should consist of two individual accounts plus a third account called Others. Post the entries for 20X1. Prepare a statement of the ending balances of the individual accounts receivable to show that they reconcile with the general ledger account. 2. On March 24, 20X2, the Ferrara account was written off. Give the journal entry.

Explanation / Answer

solution:

given that A custom furniture company made credit sales of $840,000 in 20X1 to 100 customers.

the customer details are as follows

Ferrara $5,000;

cerruti :$7,000;

others, $828,000

its stated that total collestion was $760000 which includes $5000 from cerruti .

at the end of year company declared allownace of 2.5% of credit sales for uncollectd accounts which includes ferrara

(1) general ledgar and journal entries for custum furniture company :

general ledger :   

general ledger

allowance for uncollectable accounts

bad debt expenses

accounts receibales subsidary ledger :

cerruti account

ferrara account

other accounts

(2) jouranal entry for ferrara account which was written off:

(being accounts of ferrara written off )

sales $840000 cash $760000 allowance for uncollectable accs (840000*2.5%) $21000 balance $59000

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