Question

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11.11 points Jayco Inc. started its operations in 2016. Its sales, all on account, totalled $700,000. The company collected $500,000 in cash from customers during the year and wrote off $8,000 in uncollectible accounts. The company set up an allowance for doubtful accpunts at December 31, 2016, its fiscal year end, and determined the account balance to be $14,000. The unadjusted balances of selected accounts at December 31, 2017, are as follows: Accounts receivable Allowance for doubtful accounts (debit) Sales revenue (including 80 percent in sales on account) $300,000 10,000 800,000 Aging of the accounts receivable on December 31, 2017 resulted in an estimate of $11,000 in potentially uncollectible accounts Required: 1. Prepare the journal entries to record all the transactions during 2016 and post them to appropriate T- accounts (If no entry is required for a transaction event, select "No journal entry required in the first account field.) View transaction list

Answer 1

1. 2016 Journal Entries: 1Accounts Receivables Dr To Sales Revenue a/c 700000 700000 2 Cash a/c dr To Accounts Receivable a/c 500000 500000 8000 3 Allowance for Doubtful A/cs Dr To Accounts Receivable a/c 8000 22000 4Bad Debt expenses (8000+14000) Dr To Allowance for Doubtful a/c 22000

2016 Ledger a/c: Accounts Receivable To Sales 700000 By Cash By Allowance for Doubtful accounts 500000 8000 192000 700000 By balance c/d 700000 TOTAL 192000 TOTAL To balance b/d Allowance for Doubtful Accounts To Accounts Receivable To Balance c/d TOTAL 8000 By bad debt expense 14000 22000 TOTAL By Balance b/d 22000 22000 14000

2 2017 Journal Entries: 1Accounts Receivables Dr (800000*80%) Cash a/c Dr (800000*20%) To Sales Revenue a/c 664000 160000 800000 500000 2 Cash a/c Dr To Accounts Receivable a/c 500000 8000 3 Allowance for Doubtful A/cs Dr To Accounts Receivable a/c 8000 4Bad Debt expenses (8000+14000) Dr To Allowance for Doubtful a/c 22000 22000

2017 Ledger a/c: Accounts Receivable 192000 By Cash 640000 By Allowance for Doubtful accounts 478000 24000 300000 802000 To Balance b/d To Sales revenue By balance c/d 802000 TOTAL 300000 ΤΟΤAL To balance b/d Allowance for Doubtful Accounts 24000 By Balance b/d 11000 By Bad debt expense 35000 TOTAL By Balance b/d 14000 21000 35000 11000 To Accounts Receivable To Balance c/d ТОTAL Receivables turnover: 640000 (192000+300000)/2} =2.6 times Average Collection period: 365/2.6= 140.26 days