Question

Chapter 8 Practice Problems Problem #1: Direct Write Off Method Mar 3, sold merchandise on account to Johnson, Inc., $25,800. The merchandise had a cost of $12,650 Date Accounts Dr Cr April 10 received $20,000 cash from Johnson, Inc. and wrote off the balance as uncollectible. Date Accounts Dr Cr Aug 25, reinstated the Johnson, Inc, account that was previously written off. Received the full amount due on the account. Date Accounts Dr Cr Date Accounts Dr Cr

Answer 1

Answer to Problem#1: Direct Write Off Method: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ Mar.3 $ 25,800.00 Accounts Receivable Sales Revenue (To record Sales on account) $ 25,800.00 $ 12,650.00 Cost of Goods Sold Merchandise Inventory (To record Cost of Goods Sold) $ 12,650.00 $ $ 20,000.00 5,800.00 Apr.10 Cash Bad Debt Expense Acco nts Receivable (To record partial collection of receivables and balance written off as uncollectible) 25,800.00

$ $ 20,000.00 5,800.00 Apr.10 Cash Bad Debt Expense Accounts Receivable (To record partial collection of receivables and balance written off as uncollectible) $ 25,800.00 $ 5,800.00 $ 5,800.00 Aug. 25 Accounts Receivable Bad Debts Expense (To record reinstatement of accounts receivables which are previously written off) Cash Accounts Receivable (To record collection of receivables) $ 5,800.00 $ 5,800.00

Answer to Problem#2: Allowance Method: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ $ 5,000.00 Jan.20 Accounts Receivable Sales Revenue (To record Sales on account) $ 5,000.00 $ 3,000.00 Cost of Goods Sold Merchandise Inventory (To record Cost of Goods Sold) $ 3,000.00 $ $ 2,500.00 2,500.00 Jan. 30 Cash Allowance for Uncollectible Accounts Accounts Receivable (To record partial collection of receivables and balance written off as uncollectible) $ 5,000.00

Apr.1 $ 2,500.00 $ 2,500.00 Accounts Receivable Allowance for Uncollectible Accounts (To record reinstatement of accounts receivables which are previously written off) Cash Accounts Receivable (To record collection of receivables) $ 2,500.00 $ 2,500.00