Question

Simple Things completed the following selected transactions during 2015 & 2016

2015 Dec. 31 Estimated that uncollectible-account (bad-debt) expense for the year was 3% of credit sales of $1,000,000 and recorded the amount as expense. Use the allowance method.

Dec. 31 Made the closing entry for uncollectible-account expense.

2016
Jan. 17 Sold inventory to Super Stores, $150,000, on account. Ignore cost of goods sold.

June.29 Wrote off Super Stores account as uncollectible after repeated effort to collect the outstanding amount due from them.

Aug. 6 Received $150,000 from Super Stores, along with a letter apologizing for being so late. Reinstated Super store’s account in full and recorded the cash receipt.

Dec. 31 Made a compound entry to write off the following accounts as uncollectible: Flip Flop, $45,000; Chip Chop, $62,100.

Dec. 31 Estimated that uncollectible expense for the year was 3% of credit sales of $750,000, and recorded that amount as expense

Dec. 31 Made the closing entry for uncollectible-account expense. Required:

Requirement:

 Prepare the Journal entries related to the above transactions for 2015 and 2016. (10 Marks)

Answer 1