Sparkle Spa Corporation Transactions for 2015 and 2016 May 12, 2015 Provide serv

Question

Sparkle Spa Corporation Transactions for 2015 and 2016 May 12, 2015 Provide service to customers on account $80,000 August 19, 2015 Recieve cash from customers on account $65,000 December 31, 2015 Estimated A/R that will not be received 20% April 4, 2016 Provide service to customers on account $73,000 June 22, 2016 Recieve cash from customers for services $8,000 July 2, 2016 Finds out a customer who owed $2,000 now cannot pay his Account Recievable. So Sparkle Spa will write off this account $2,000 October 19, 2016 Recieve cash from customers for services $42,000 December31,2016 Estimated A/R that will not be received 20% Sparkle Spa Corporation 2015 Journal Entries Date Account Debit Credit May 12, 2015 Accounts Recievable Service Revenue Provide services on account. Aug 19, 2015 Cash Accounts Recievable Recieve cash on account Dec 31, 2015 Bad Debt Expense Allowance for Uncollectable Accounts Estimate future bad debts Sparkle Spa Corporation Transactions for 2015 and 2016 May 12, 2015 Provide service to customers on account $80,000 August 19, 2015 Recieve cash from customers on account $65,000 December 31, 2015 Estimated A/R that will not be received 20% April 4, 2016 Provide service to customers on account $73,000 June 22, 2016 Recieve cash from customers for services $8,000 July 2, 2016 Finds out a customer who owed $2,000 now cannot pay his Account Recievable. So Sparkle Spa will write off this account $2,000 October 19, 2016 Recieve cash from customers for services $42,000 December31,2016 Estimated A/R that will not be received 20%

Explanation / Answer

Sparkle Spa Corporation 2015 Journal Entries Date Account Debit Credit May 12, 2015 Accounts Recievable 80000 Service Revenue 80000 Provide services on account. Aug 19, 2015 Cash 65000 Accounts Recievable 65000 Recieve cash on account Dec 31, 2015 Bad Debt Expense 3000 Allowance for Uncollectable Accounts 3000 ((80000-65000)*20%) Estimate future bad debts april 4, 2016 Accounts Recievable 73000 Service Revenue 73000 Provide services on account. june 22, 2016 Cash 8000 Accounts Recievable 8000 Recieve cash on account july 2, 2016 Bad Debt Expense 2000 accounts receivable 2000 Estimate future bad debts october 19,2016 Accounts Recievable 42000 Service Revenue 42000 Provide services on account. december 31,2016 Bad Debt Expense 21400 ((73000-8000)+42000)*20% Allowance for Uncollectable Accounts 21400 Estimate future bad debts

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