The balance sheet of Antonio Vivaldi Company at Dec 31, 2007 ,includes the follo

Question

The balance sheet of Antonio Vivaldi Company at Dec 31, 2007 ,includes the following: Notesreceivable                                    36,000 Accountsreceivable                              182,100 Less: Allowance for doubtfulaccts                                        200,800 Transactions in 2007 include the following: 1. Accounts receivable of $138,000 were collected includingaccounts of $40,000 on which 2% sales discounts were allowed. 2. $6,300 was received in payment of an account which waswritten off teh books as worthless in 2007. (Hint:reestablish the receivable account) 3. Customer accounts of $17,500 were wretten off during theyear. 4. At year-end the Allowance for Doubtful Accounts wasestimated to need a balance of $20,000 . This estimate isbased on an analysis of aged accounts receivable. Instructions: Prepare all journal entries necessary to reflect tehtranactions above. The balance sheet of Antonio Vivaldi Company at Dec 31, 2007 ,includes the following: Notesreceivable                                    36,000 Accountsreceivable                              182,100 Less: Allowance for doubtfulaccts                                        200,800 Transactions in 2007 include the following: 1. Accounts receivable of $138,000 were collected includingaccounts of $40,000 on which 2% sales discounts were allowed. 2. $6,300 was received in payment of an account which waswritten off teh books as worthless in 2007. (Hint:reestablish the receivable account) 3. Customer accounts of $17,500 were wretten off during theyear. 4. At year-end the Allowance for Doubtful Accounts wasestimated to need a balance of $20,000 . This estimate isbased on an analysis of aged accounts receivable. Instructions: Prepare all journal entries necessary to reflect tehtranactions above.

Explanation / Answer

Journal Entries

DR.

CR.

1

137200

800

138000

2

6300

6300

6300

6300

3

17500

17500

4

13900

13900

DR.

CR.

17300

6300

17500

6100

23600

23600

6100

13900

Journal Entries

DR.

CR.

1

Cash

137200

Discount allowed

800

          Accounts Receivable

138000

( discount allowed on $40000 at 2%)

2

Accounts Receivable

6300

          Allowancefordoubtful

6300

            debts account (first reversal of write off entry when bad debts recovered) Cash

6300

      AccountsReceivable

6300

(cash received from customer)

3

Allowance for doubtful accounts

17500

        Accounts Receivable

17500

( customer accounts write-off)

4

Bad debts expense

13900

       Allowance for doubtful acc.

13900

(allowance account estimated by 13900 to maintain$20000 bal.) Notes: Allowance accountsbal.      

DR.

CR.

Balance 31 dec 2007

17300

Accounts Receivable

6300

Accounts Receivable

17500

Balance c/d

6100

total

23600

23600

Balance B/D

6100

Bad debts

13900

Balance c/d $20,000 total $20,000 $20,000 Balance B/D $20,000

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