Question

Give general journal entries, in proper form, for each of the following selected transactions of ABC Company. ABC uses the gross price method of accounting for sales discounts and the allowance method of accounting for uncollectible accounts receivable. Jan 15. ABC advanced $20,000 to one of its managers. The manager is allowed one interest free advance for personal use per year. Repayment is required within 90 days of the advance Jan 31 ABC recorded monthly sales (all on credit) of $350,000. Terms of all sales are 2/10, n/30 Feb 15 Accounts receivable of $600,000 was collected from January's monthly sales of which $100,000 were within the discount period Feb 20. Evidence indicates that a $5000 accounts receivable from ABC is uncollectible. The account is more than 30 days past due, and all collection efforts have failed

Answer 1

Solution:

Credit Date Particulars Jan-15 Advance to Manager Cash Debit $ 20,000 $ 20,000 Jan-31 Account Receivable $ 350,000 Sales $ 3500001 Feb-15 Cash Sales Discount (1000,000*2%] Account Receivables $598,000 $ 2,000 $ 600,000 $5,000 Feb-20 Allowance for Doubtful Accounts Account Receivables $5,000 $ 8,000 Feb-28 Allowance for Doubtful Accounts Account Receivables $ 8,000 $5,000 Mar-01 3% Note Receivable Account Receivable $5,000 $ 30,000 Mar-15 Assigned Account Receivable Account Receivable $ 30,000 Mar-15 Cash $ 24,000 Notes Payable $ 24,000 $ 13,000 Mar-28 Bad Deebt Expense Allowance for Doubtful Accounts $ 13,000 Apr-15 Cash $ 28,000 Assigned Accounts Receivable $ 28,000 Apr-15 4% Notes Payable Interest Expense ($24,000 * 4%) *1/12 Cash $ 24,000 $ 80 $ 24,080