Question

Journal Entries for Credit Losses At the beginning of the year, the Dallas Company had the following accounts on its books: Accounts Receivable $264,000 Debt Allowance for Doubtful Accounts $16.500 Credit During the year, credit sales were $2,346,000 and collections on account were $2,350,000. The following transactions, among others, occurred during the year: Feb.17 Wrote off R St. John's account, $7,500 May 28 Wrote off G Herberger's account $4800 Oct 13 Received 1,200 from G. Herberger who is in bankruptcy proceedings in final settlement of the account written off on May 28 This amount is not included in the $2,350,000 collections Dec 15 Wrote off R. Cancy's account, Dec 31 In an adjusting entry, recorded the allowance for doubtful accounts of credit sales for the year Required a. Prepare journal entries to record the credit sales, the collections on account, and the preceding transactions and adjustment b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.

Answer 1

A. Journal entries
Record credit sales for the year
31-Dec	Account receivable Dr.	2346000
	To, Credit sales		2346000
Record collection for the year
31-Dec	Bank account Dr.	2350000
	To, Sundry debtors		2350000
Woff St john account
17-Feb	Allowance for doubtfull debt a/c Dr.	7500
	To, St John's account		7500
Woff G Herberger account
28-May	Allowance for doubtfull debt a/c Dr.	4800
	To, G Herberger account		4800
Reinstate G Herberger account for partial recovery
13-Oct	G Herberger account Dr.	1200
	To, Allowance for doubtfull debt a/c		1200
Recover collection from G Herberger
13-Oct	Bank account Dr.	1200
	To, G Herberger account		1200
Woff R Clancy account
15-Dec	R Clancy account Dr.	5000
	To, Allowance for doubtfull debt a/c		5000
Record allowance for doubtfull debt
31-Dec	Bad Debts account Dr.	18768
	To, Allowance for doubtfull debt a/c		18768
B.
	Account receivable	258800
	Less: Allowance for doubtful debt	19168
		239632
Working: 1				Working: 2
	Receivable				Doubtful Debt
Opening	264000	Cr		Opening	16500	Dr
During year	2346000	Cr		reduce	-7500	Cr
				reduce	-4800	Cr
Total	2610000	Cr		add	1200	Dr
				reduce	-5000	Cr
Less:
Collection	2350000	Dr		Total	400	Dr
Collection	1200	Dr
				Provision for year	18768	Dr
Net o/s	258800	Dr
				Net balance	19168	Dr