Lopez Company began operations on January 1, 2010. During its first two years, t

Question

Lopez Company began operations on January 1, 2010. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.

2010
a. Sold $1,803,750 of merchandise (that had cost $1,475,000) on credit, terms n/30.
b. Wrote off $20,300 of uncollectible accounts receivable.
c. Received $789,200 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible

2011
e. Sold $1,825,700 of merchandise (that had cost $1,450,000) on credit, terms n/30.
f. Wrote off $28,800 of uncollectible accounts receivable.
g. Received $1,304,800 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible

Prepare journal entries to record Lopez’s 2010 and 2011 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system.) (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)


I need help coming up with the correct amount for the journal entry for items D and H. Step by step instructions would be really great.

Explanation / Answer

Year 2010: (a)31 Dec 2010 Acct Rx Dr 1,803,750 Sales Cr 1,803,750 31 Dec 2010 Cost of goods sold Dr 1,475,000 Merchandise inventory Cr 1,475,000 Sold merchandise on credit (b) 31 De 2010 Allow for Bad debts Dr $20,300 Acct Rxable Cr $20,300 Wrote off $20,300 of uncollectible accounts receivable (c) 31 Dec 2010 Cash Dr 789200 Acct Rxable Cr 789200 Received $789,200 cash in payment of accounts receivable (d) Bal Acct Rxable = Total A/R - Uncolletible - AR rxd = 1,803,750-20,300-789200=994250 So 1.5%*994250 = $14,914 31 Dec 2010 Bad Debts Expense Dr 35214 Allowance for Doubtful Accounts Cr 35214 1.5% of accounts receivable will be uncollectible 14914+20300 written off Year 2011: e. 31 Dec 2011 Acct Rx Dr 1,825,700 Sales Cr 1,825,700 31 Dec 2011 Cost of goods sold Dr 1,450,000 Merchandise inventory Cr 1,450,000 Sold merchandise on credit f.31 De 2011 Allow for Bad debts Dr $28,800 Acct Rxable Cr $28,800 Wrote off $28,800 of uncollectible accounts receivable. g.31 Dec 2011 Cash Dr 1,304,800 Acct Rxable Cr 1,304,800 Received $1,304,800 cash in payment of accounts receivable. h. Bal Acct Rxable = Total A/R - Uncolletible - AR rxd = 1,825,700 - 28,800-1,304,800 = 492100 So 1.5%*492100 = 7382 31 Dec 2011 Bad Debts Expense Dr 36182 Allowance for Doubtful Accounts Cr 36182 1.5% of accounts receivable will be uncollectible 28800+7382

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