Question

Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Year 1 a. Sold $1,347,400 of merchandise (that had cost $975,800) on credit, terms n/30. b. Wrote off $21,800 of uncollectible accounts receivable. c. Received $674,300 cash in payment of accounts receivable. d. In adjusting the accounts on December 31, the company estimated that 2.10% of accounts receivable would be uncollectible. Year 2 e. Sold $1.549.400 of merchandise (that had cost $1,304,300) on credit, terms n/30. f. Wrote off $33,000 of uncollectible accounts receivable. g. Received $1,243,300 cash in payment of accounts receivable. h. In adjusting the accounts on December 31, the company estimated that 2.10% of accounts receivable would be uncollectible. Required: Prepare journal entries to record Liang's Year 1 and Year 2 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar.)

Answer 1

Journal entry

No	General Journal	Debit	Credit
a	Account receivable	1347400
	Sales revenue		1347400
	Cost of goods sold	975800
	Inventory		975800
b	Allowance for doubtful accounts	21800
	Account receivable		21800
c	Cash	674300
	Account receivable		674300
d	Bad debt expense (651300*2.1%+21800)	35477
	Allowance for doubtful accounts		35477
e	Account receivable	1549400
	Sales revenue		1549400
	Cost of goods sold	1304300
	Inventory		1304300
f	Allowance for doubtful accounts	33000
	Account receivable		33000
g	Cash	1243300
	Account receivable		1243300
h	Bad debt expense	13935
	Allowance for doubtful accounts		13935