Question

Question 1: Micha Clothing completed the following transactions during 2018 and 2019: 2018: Dec. 31: Estimated that bad debt expense for the year was 3% of the credit sales of $ 750 000 and recorded the amount as expense December 31: Made the long entry of the bad debt expense . . 2019: Feb. 15 : Sold inventory to Simo S10 000 on credit terms of 2/10,n/30. Cost of goods sold: $5 ODO. June 30: Wrote off Simo's account as uncollectible after repeated efforts to collect from the customer • September 10: Received $5 000 from Simo along with a a note receivable of $5 000, 20 days, 10%. Reinstated the account in full September 30. Collected the Simotnote at maturity date December 31: Made a compound entry to write off the following account: Corbeil s 1500 o Tremblay $3000 Bellehumeur: $12000 December 31: The company decided to use the aging-of-accounts method and estimated that $30 000 of its accounts receivable will prove uncollectible December 31: Made the closing entry of the bad debt expense . . O . REQUIRED: 1. Record the transactions in the general journal 2. Post them in the three column general ledger accounts of Allowance for Doubtful Accounts and Bad Debt Expence.

Answer 1

1.

Date	General Journal	Debit	Credit
2018		$	$
Dec 31	Bad Debt Expense	22,500
	Allowance for Doubtful Accounts		22,500
Dec 31	Income Summary	22,500
	Bad Debt Expense		22,500
2019
Feb 15	Accounts Receivable	10,000
	Sales Revenue		10,000
Feb 15	Cost of Goods Sold	5,000
	Inventory		5,000
June 30	Allowance for Doubtful Accounts	10,000
	Accounts Receivable		10,000
Sept 10	Cash	5,000
	Notes Receivable	5,000
	Allowance for Doubtful Accounts		10,000
Sept 30	Cash	5,027.78
	Notes Receivable		5,000
	Interest Revenue ( $ 5,000 x 10 % x 20 / 360)		27.78
Dec 31	Allowance for Doubtful Accounts	16,500
	Accounts Receivable: Corbeil		1,500
	Accounts Receivable: Tremblay		3,000
	Accounts Receivable: Bellehumeur		12,000
Dec 31	Bad Debt Expense	24,000
	Allowance for Doubtful Accounts		24,000
Dec 31	Income Summary	24,000
	Bad Debt Expense		24,000

2.

Allowance for Doubtful Accounts
Date	Debit	Credit	Balance
Dec 31, 2018		22,500
			22,500
June 30, 2019	10,000
Sept 10, 2019		10,000
Dec 31, 2019	16,500
Dec 31, 2019		24,000	30,000
Bad Debt Expense
Date	Debit	Credit	Balance
Dec 31, 2018	22,500
Dec 31, 2018		22,500	0
Dec 31, 2019	24,000
Dec 31, 2019		24,000	0