3. During th current Year Bob\'s Ceramics Shop had sales revenue of $180 000 of

Question

3. During th current Year Bob's Ceramics Shop had sales revenue of $180 000 of which $74.000 was on cre it. A he s t of he current year, Accounts Receivable showed ? S2600 debit ba nce, and the Allowance or Doub ul Accounts showed 1,000 credit balance. Colections of accounts receivable during the current year aiounied to $59,000. Dela during lhe current year follows. a. On Deoernber 31 an Account Receivable (Toby's Gifl Shp)f S1,700 from a prior year was deterrrined to be uncollectible, herefore, it was wriler oll iiiedialely as a bad debl ? on December 31 on the basis of €xperience, a decision was rre de o continue he a oun lng po cy or bas?ng estimated bad debt losses on 2.0 percent of ?edit sales for he year. Required: 1. Propare the roquircd jcurnal entries for the two items on Dccomber 31, end of the accounting pericd. (If no entry is required for a transactionievent, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet On December 31, an Account Receivable (Toby's Gift shop) of S1,700 from a prior year was determined to be uncollectible; therefore, it was written off immediately as a bad debt. Notc: Enter dabits before aredts. Date Debit Credit Deccmber 31 Alowancc for doubtiul acccunts 1,700 Accounts receivable (Toby's Git Shop)

Explanation / Answer

Solution 1:

Solution 2:

Journal Entries - Bob Ceramics shop Date Particulars Debit Credit 31-Dec Allowance for doubtful accounts Dr $1,700.00            To Accounts Receivables $1,700.00 (Being bad debts written off) 31-Dec Bad debts expense Dr ($74,000*2%) $1,480.00            To Allowance for doubtful accounts $1,480.00 (Being provision for doubtful accounts recorded)

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