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At January 1, 2018, Hly Mountain Flagpoles had Accounts Receivable of $27,000, and Allowance for Bad Debes had a credit balance of $4,000. During the year, Hilly Mountain Flagpoles recorded the following: Click the icon to view the transactions) Read the requirements Requirement 1. Journalize Hilly's transactions that occurred during 2018. The company uses the allowance method Record debts first, then credits. Select the explanation on the last line of the journal entry table.) (a) Sales of $177,000 (5160,000 on account: $17.000 for cash). Ignore Cost of Goods Sold (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit 2018 (b.) Collections on account, $127,000 Accounts and Explanation Date Credit 2018

Answer 1

Solution 1 Journal Entries a) Date 2018 Description Accounts Receivables Cash Debit $1,60,000.00 Credit 17,000.00 $1,77,000.00 Sales (To establish Record the sales) Explanation Cash sales of $17,000 made , thus cash received is debited. Remaining sales were made in credit, and hence Accounts receivables is Debited with $160,000 Description Cash Debit b) Date 2018 Credit $1,27,000.00 Accounts receivables $1,27,000.00 (To establish cash received from debtors) Explanation Cash amounting to $127000 received from the debtors is debited in Cash ledger. Credit Debit $ 2,800.00 c) Date 2018 Description Bad debts expense $ Allowance for Bad debts 2,800.00 Allowance for Bad debts $ 2,800.00 Accounts receivables $ 2,800.00 (To establish write off uncollectible receivables) Explanation Bad debt expense is recorded by $2800, a provision is recorded with same amount Accounts receivable is reduced by $2800 by writing off the provision created.

Solution 2 Accounts recievables Amount Amount 27,000 Cash Particulars Particulars Balance b/d Sales 1,27,000 1,60,000 Balance c/d 60,000 1,87,000 1,87,000 Allowance for Bad debts Amount Amount Particulars Particulars Balance b/d Bad debts expense 4,000 2,800 Balance c/d 6,800 6,800 6,800 Solution 3 Journal Entries Description Bad debts expense Debit $ Credit Date 2018 1,600.00 $ Allowance for Bad debts 1,600.00 Allowance for Bad debts $ 1,600.00 Accounts receivables $ 1,600.00 (To establish write off uncollectible receivables) Explanation Bad debt expense is recorded by $1600 (1% of $160000), a provision is recorded with the same amount Accounts receivable is reduced by $1600 by writing off the provision created.

Accounts recievables Amount 27,000 Cash Amount Particulars Particulars Balance b/d Sales 1,27,000 1,60,000 Balance c/d 60,000 1,87,000 1,87,000 Allowance for Bad debts Amount Amount Particulars Particulars Balance b/d Bad debts expense Bad debts expense 4,000 2,800 1,600 Balance c/d 8,400 8,400 8,400 Allowance for Bad debts Amount Amount Particulars Particulars Allowance for bad debts 4,400 Allowance for bad debts 2,800 Statement of P&L 1,600 4,400 4,400 Solution 4 Balance Sheet (Partial) Current Assets Accounts receivables 60,000 Less: Allowance for Bad debts 8,400 51,600

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