Question

6-56 Subsidiary Ledger A custom furniture company made credit sales of $840,000 in 20X1 to 100 customers: Ferrara, $5,000; Cerruti, $7,000; others, $828,000. Total collections during 20X1 were $760,000 includ- ing $5,000 from Cerruti, but nothing was collected from Ferrara. At the end of 20X1, an allow- ance for uncollectible accounts was provided of 2.5% of credit sales. 20X1 is the company's first year of operations. 1. Set up general ledger accounts for Accounts Receivable, Allowance for Uncollectible Accounts, and Bad Debt Expense plus a subsidiary ledger for Accounts Receivable. The subsidiary ledger should consist of two individual accounts plus a third account called Others. Post the entries for 20X1. Prepare a statement of the ending balances of the individual accounts receivable to show that they reconcile with the general ledger account. 2. On March 24, 20X2, the Ferrara account was written off. Give the journal entry.

Answer 1

ANSWER

Sales General Ledger $ 840,000 Cash Allowance for Uncollectible Accounts Bal. $ 840,000 $760,000 $ 21,000 $ 59,000 $840,000 Allowances for Uncollectible Accounts $ 21,000 Bad Debt Expenses To Accounts Receivables Bal. $ 7,000 $ 14,000 $ 21,000 $ 21,000 Bad Debt Expenses $ 7,000 Allowances for Uncollectible Accounts $ 7,000 $ Accounts Receivables Subsidiary Ledger Cerruti $ 5,000 Cash Sales $ 5,000 $ 5,000 $ 5,000 Ferrara 7,000 Allowance for Uncollectible Accounts Sales $ $ 7,000 $ 7,000 $ 7,000 Sales Others $ 828,000 Cash Allowance for Uncollectible Accounts $ 755,000 $ 14,000 $ 59,000 $828,000 $ 828,000

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