Question

The balance sheet of Buffalo Company at December 31, 2019, includes the following.

Notes receivable		$53,200
Accounts receivable		189,700
Less: Allowance for doubtful accounts		18,700		$224,200

Transactions in 2020 include the following.

1.		Accounts receivable of $151,400 were collected including accounts of $64,600 on which 4% sales discounts were allowed.
2.		$5,950 was received in payment of an account which was written off the books as worthless in 2019.
3.		Customer accounts of $18,900 were written off during the year.
4.		At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $29,900. This estimate is based on an analysis of aged accounts receivable.

Prepare all journal entries necessary to reflect the transactions above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.
	(To reinstate the accounts receivable)
	(To record the collection on account)
3.
4.

Answer 1

Credit No. Accounts titles and Explanation Debit 1 Cash ($151,400 - (64,600*4%)] $ 148,816 Sales Discount ($64,600*4%) $ 2,584 Accounts Receivable (To record the collection of accounts receivables) $ 151,400 $ 5,950 2 Accounts Receivable Allowance for Doubtful Accounts (To reinstate the accounts receivable) $5,950 $ 5,950 Cash Accounts Receivable (To record the collection on account) $5,950 $ 18,900 3 Allowance for Doubtful Accounts Accounts Receivable (To record the accounts written off) $ 18,900 $ 24,150 4 Bad Debt Expense Allowance for Doubtful Accounts (To record the bad debts expense) $ 24,150 Note: Unadjusted balance in allownace for doubtful accounts = $18,700 + $5,950 - $18,900 Unadjusted balance in allownace for doubtful accounts = $5,750 Required year ending balance of allowance for doubtful accounts = $29,900 - $5,750 Required year ending balance of allowance for doubtful accounts = $24,150