Y NB Zendy Neves AL EXAM REVIEW (EXAM 12/20 AT 6:0 3 of 10 (3 complete) HW Sc ic
ID: 2601060 • Letter: Y
Question
Y NB Zendy Neves AL EXAM REVIEW (EXAM 12/20 AT 6:0 3 of 10 (3 complete) HW Sc ic) IC wing selected transactions during 2018 and 2019: More Info 2018 Estimated that bad debts expense for the year was 2% of credit sales of $450,000 and recorded that amount as expense. The company uses the allowance method. Dec. 31 31 Made the closing entry for bad debts expense Jan. 17 Sold merchandise inventory to Mack Smith, $400, on account. Ignore Cost of Jun. 29 Wrote off Mack Smith's account as uncollectible after repeated efforts to Aug. 6 Dec. 31 Made a compound entry to write off the following accounts as uncollectible 2019 Goods Sold. collect from him. Recelved $400 from Mack Smith, along with a letter apologizing for being so late. Reinstated Smith account in full and recorded the cash receipt Cam Carter, $1,400:; Mike Venture, $1.200; and Russell Reeves, $400. Estimated that bad debts expense for the year was 2% on credit sales of $510,000 and recorded the expense. Made the closing entry for bad debts expense. 31 31 Print Done Clear AllExplanation / Answer
Date Account Debit Credit 2018 Dec.31 Bad debt expense 9000 To Allowance for doubtful accounts 9000 [Adjusting entry passed for bad debts= 450000*2%=9000] Dec.31 Income summary 9000 To Bad debt expense 9000 [bad debt expense account closed to income summary] 2019 Accounts receivable 400 Jan.17 To sales 400 [sold goods on credit] Jun.29 Allowance for doubtful accounts 400 To Accounts receivable 400 [bad account written off] Aug.6 Accounts receivable 400 To Allowance for doubtful accounts 400 [written off account realised] Aug.6 Cash 400 To Accounts receivable 400 [written off account realised] Dec.31 Allowance for doubtful accounts 3000 To Accounts receivable 3000 [bad accounts written off] Dec.31 Dec.31 Bad debt expense 10200 To Allowance for doubtful accounts 10200 [Adjusting entry passed for bad debts= 510000*2%=10200] Dec.31 Income summary 10200 To Bad debt expense 10200 [bad debt expense account closed to income summary]
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