Question

Problem 7-6 The balance sheet of Ayayai Company : December 31, 2016, includes the following- Notes receivable $41,800 Accounts receivable 185.800 Less: Allowance for doubtful accounts 23,100 $204,500 2017 include the following. Transactions i 1. Accounts receivable of $142,400 were collected including accounts of $66,500 on which 3% sales discounts were allowed. 2. $5,890 was received in payment of an account which was written off the books as worthless in 2016. 3. Customer accounts of $23,300 were written off during the year. 4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $22,900. This estimate is based on an analysis of aged accounts receivable. pare all 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.

Answer 1

Account Titles and Explanation Cash (142,400- 1,995) Sales Discount (66,500 x 3 %) Debit Credit No 1 140,405 1,995 Accounts receivable 142,400 (to record cash received) Accounts receivable 2 5,890 Allowance for Doubtful accounts 5,890 (to reinstate the accounts receivable) Cash 5,890 Accounts receivable 5,890 (to record the collection on account) Allowance for doubtful accounts 3 23,300 Accounts receivable 23,300 (to write off the accounts) Bad Debt Expense 17,210 4 Allwoance for doubtful accounts 17,210 (to record the bad debts expense) Working Notes Calculation of Bad Debts Expense Allowance for Doubtful Accounts 12/31/16 23,100 Add: 2016 accounts reinstate 5,890 Less: Accounts write off (23,300) 5,690 Less: Estimated Allowance for doubtful Accounts at year end (22,900) Bad Debts Expense (17,210)