Question

Journalizing and posting adjustments for Bad Dobto Expense and write offs and recovery based or balance Lehect approach Preparation of partial balance sheet in 20x7. 134-4. Simon Company completed the following transactions: 20x8 Jan. 9 Sold merchandise on account to Ray's Supply, $1,500. Jan. 15 Wrote off the account of Pete Runnels as uncollectible because of his death, $600. Mar. 17 Received $400 from Roland Co., whose account had been written off in 20X7. The account was reinstated and the collection recorded. Apr. 9 Received 10% of the $4,000 owed by Lane Drug. The remainder was written off as uncollectible. June 15 The account of Mel's Garage was reinstated for $1,200. The account was written off three years ago and collected in full today. Oct. 18 Prepared a compound entry to write the following accounts off as uncol- lectible: Jane's Diner, $200; Keen Auto, $400; Ralph's Hardware, $600. Nov. 12. Sold merchandise on account to J. B. Rug, $1,900. Dec. 31. Based on an aging of Accounts Receivable, it was estimated that $7,000 will be uncollectible out of a total of $160,000 in Accounts Receivable. Dec. 31 Closed Bad Debts Expense to Income Summary From the preceding as well as the following additional data: Acct. No. Balance Allowance for Doubtful Accounts $4,100 Income Summary 312 Bad Debts Expense 612 114 Check Figures Total current asseto 2360 a. Journalize the transactions.. b. Post to Allowance for Doubtful Accounts, Income Summary, and Bad Debts Expense accounts as needed. (Be sure to record the beginning balance in the Allowance account in your Study Guide and Working Papers.) c. Prepare a current assets section of the balance sheet. Ending balances needed: Cash, $13,000; Accounts Receivable, $160,000; Office Supplies, $2,110; Merchandise Inventory, $103,000; Prepaid Rent, $1,250.

Answer 1

a.Journal Entries

Date	Particulars	Lf	Amount	Amount
Jan 9	Cash a/c----Dr to Ray's supply a/c (Being merchandise sold to Ray's supply on account)		1500	1500
Jan 15	Bad debt a/c----Dr to Pete Runnels a/c (Being amount became uncollectable)		600	600
Mar 17	Bad debts recovered a/c-----Dr to Bad debts a/c (Being bad debts recovered)		400	400
Apr 9	Cash a/c----dr Bad debts a/c---Dr to Lane Drug a/c (Being 10% of amount recovered and 90% became uncollectable)		400 3600	4000
June 15	Bad debts recovered a/c----Dr to Bad debts a/c (Being bad debts recovered)		1200	1200
Oct 18	Bad debts a/c-----Dr to Jane's diner a/c to Keen Auto a/c to Ralph's Hardware a/c (Being accounts became uncollectable)		1200	200 400 600
Nov 12	Cash a/c----Dr to J.B.Rug a/c (Being merchandise sold on account)		1900	1900
Dec 31	Bad debts a/c---Dr to Accounts receivable a/c (Being accounts receivable became uncollectable)		7000	7000
Dec 31	Income summary a/c----Dr to Bad debts a/c (Being bad debts transfered to income summary)		7600	7600

b.

• Allowance for Doubtful Account-4100
• Income Summary-7600
• Bad Debts Expense-7600

c.

Assets	Amount
Cash	13000
Accounts Receivable	160000
Office Supplies	2110
Merchandise Inventory	103000
Prepaid Rent	1250
TOTAL	279360