ACC 111:-Principles of Accounting I-Section 06 Fall 2017 myBusinessCourseChapter

Question

ACC 111:-Principles of Accounting I-Section 06 Fall 2017 myBusinessCourseChapter 8 Homework usinessCourse Menu Journal Entries for Credit Losses At the beginning of the year, Whitney Company had the following accounts on its books Accounts Receivable $154,000 Debit Allowance for Doubtful Accounts$7,900 Credit During the year, credit sales were: $1,133,000 and collections on account were: $1,120,000 The following transactions, among others, occurred during the year Feb.17 Wrote off R. Lowell's account May.28 Wrote off G. Boyd's account Oct.13 $3,300 $2,100 Received $500 from G. Boyd, who is in bankruptcy proceedings in final settlement of the account written off on May 28. This amount is not included in the $1,120,000 collections Wrote off K. Marshall's account, In an adjusting entry, recorded the allowance for doubtful accounts at of credit sales for the year. Dec.15 $1,400 Dec.31 0.5% Required a. Prepare journal entries to record the credit sales, the collections on account, and the preceding transactions and adjustment.

Explanation / Answer

Allowance for doubtful accounts is recorded at 0.5% of credit sales for the year.

Credit sales for the year = $1,133,000

Therefore,

Bad debt exppese = $1,133,000 x 0.5% = $5,665

The correct journal entry will be prepared as follows:

b.

Date Account Titles and Explanation Debit Credit Dec. 31 Bad Debt Expense 5,665       Allowance for Doubtful Accounts 5,665

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