Question

w your periode b. Comment on the use of the 1.6 percent rate to provide for credit losses in part a. Journal Entries for Credit Losses At the beginning of the year, Portal Company had the following accounts on its books: Accounts receivable........ Allowance for doubtful accounts....... $140,000 (debit) 8,000 (credit) During the year, credit sales were $1,173,000 and collections on account were $1,175,000. The follow. ing transactions, among others, occurred during the year: Feb. May Oct. 17 Wrote off R. Lowell's account, $4,000. 28 Wrote off G. Boyd's account, $3,400. 13 Received $600 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 $1,175,000 collections. 15 Wrote off K. Marshall's account, $1,600. 31 In an adjusting entry, recorded the allowance for doubtful accounts at 0.9 percent of credit sales for the year. Dec. Required a. Prepare journal entries to record the credit sales, the collections on account, and the precum transactions and adjustment. b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear December 31 balance sheet. A. Credit Losses Based on Accounts Receivable At December 31, Mueller Company had a ompany had a balance for

Answer 1

Journal entries Debit Credit $ 4,000.00 17-Feb Allowance for Doubtful Accounts R. Lowell's Account $ 4,000.00 Amount of receivable from debtor Wrote off as bad debts $ 3,400.00 28-May Allowance for Doubtful Accounts G. Boyd's Account $ 3,400.00 Amount of receivable from debtor Wrote off as bad debts $ 600.00 13-Oct Accounts Receivable Accounts Allowance for Doubtful Accounts $ 600.00 Reinstating entry passed for recording entry of amount that was written of as bad debts. $ 600.00 13-Oct Cash / Bank Accounts Receivable Accounts $ 600.00 Amount recovered as final settlement from Bad debts was written off.

$ 1,600.00 24-Aug Allowance for Doubtful Accounts K. Marshall's Account $ 1,600.00 Amount of receivable from debtor Wrote off as bad debts $ 1,173,000.00 31-Dec Accounts Receivable Accounts Sales $ 1,173,000.00 Credit Sale occurred during the period was recorded $ 1,175,000.00 31-Dec Cash / Bank Accounts Receivable Accounts $1,175,000.00 Cash receipts from accounts Receivable was recorded $ 10,557.00 31-Dec Bad debt expenses Allowance for Doubtful account's $ 10,557.00 .90% of credit sales was recorded as allowance for doubtful accounts. Allowance =1,173,000* 90%

Amount Date Particulars 1-Jan Opening Bal ACCOUNTS RECEIVABLE ACCOUNT Amount Date Particulars 140,000.00 13-Oct Cash / Bank 600.00 600.00 13-Oct Allowance for Doubtful Accounts 31-Dec Sales 1,173,000.00 31-Dec Cash / Bank 1,175,000.00 Closing Balance 138,000.00 Total 1,313,600.00 Total 1,313,600.00 Amount 8,000.00 Allowance for Doubtful Accounts Date Particulars Amount Date Particulars 1-Jan Opening Balance 17-Feb R. Lowell's Account 4,000.00 28-Mar G. Boyd's Account 3,400.00 13-Oct Accounts Receivable Account 15-Dec K. Marshall's Accoun 1,600.00 31-Dec Bad Debt Expenses 31-Dec Closing Balance 10,157.00 600.00 10,557.00 Total 19,157.00 Total 19,157.00 LLLLLLS