Question

Question #2: The Balance Sheet of Kamla Company on December 31, 2017 showed Accounts Receivable of $720,000 and Allowance for Doubtful Accounts of $9,800. During the month of January 2018, the transactions affecting accounts receivable were as follows: a) Sales on account b) Sales returns and allowances (on credit sales) c) Cash collections from customers d) Accounts receivable from Maude Company written-off as worthless 128,000 43,000 165,000 8,200 After a careful aging and analysis of all customer's accounts on January 31, 2018, it was decided that the Allowance for Doubtful Accounts should be adjusted to a balance of $14,600 Required 1) Using January 1 as the transaction date, record the entry in general journal form for each of the four above items (a, b, c, & d) and the adjusting entry on January 31 to adjust the allowance for doubtful accounts. 2) Record the entries in the general journal assuming that on June 30, six months after the receiva Company had been written-off as worthless, Maude Company settled the account by sending us a for $4,500

Answer 1

No	Account and explanation	debit	credit
A	Account receivable	128000
	Sales		128000
	(To record sales)
b	Sales return and allowance	43000
	Account receivable		43000
	(To record sales return)
c	Cash	165000
	Account receivable		165000
	(To record collection)
d	Allowance for doubtful accounts	8200
	Account receivable		8200
	(To record write off)
e	Bad debt expense (14600-1600)	13000
	Allowance for doubtful accounts		13000
	(To record bad debts)

2) Journal entry

Date	account and explanation	debit	credit
June 30	Account receivable	4500
	Allowance for doubtful accounts		4500
	(To record write off recovered)
	Cash	4500
	Account receivable		4500
	(To record collection)