Question

Gitter Watches completed the following selected transactions during 2018 and 2019 1 (Click the icon to view the transactions.) Read the requirements Dec. 31: Made the closing entry for bad debts expense. Date 2019 Dec. 31 (Clos.) Accounts and Explanation DebitCredit Now post the transactions to the two T-accounts (Enter OT on the normal side of the account for any zero balances ) Review the journal entries Allowance for Bad Debts Bad Debts Expense Choose from any lst or enter any number in the nout els dhen O Type here to search 018 Dec. 31 Estimated that bad debts expense for the year was 3% of credit sales of $480,000 and recorded that amount as expense. The company uses the allowance method. Made the closing entry for bad debts expense. 0 31 Jan. 17 Jun. 29 Aug. 6 Dec. 31 31 31 019 Sold merchandise inventory to Marty White, $600, on account. ignore Cost of Goods Sold. Wrote off Marty White's account as uncollectible after repeated efforts to collect from him. Received $600 from Marty White, along with a letter apologizing for being so late. Reinstated White's account in full and recorded the cash receipt Made a compound entry to write off the following accounts as uncollectible: Billy Krupp, $1,500; Maria Bennett, $1,400; and Ronald Richter, $450. Estimated that bad debts expense for the year was 3% on credit sales of $550,000 and recorded the expense. Made the closing entry for bad debts expense 2 24

Answer 1

Requirement 1:

Journal entries and T-accounts are as prepared below:

Date	Particulars	L.F	Debit	Credit
2018
Dec-31	Bad debt Expense (480,000*3%)		14,400
	Allowance for bad debts			14,400
	(for bad debts recorded)
Dec-31	Income summary		14,400
	Bad debt expense			14,400
	(for expense closed to Income summary)
2019
Jan-17	Account Receivable-Marty		600
	sales			600
	(for goods sold)
Jun-29	Allowance for bad debts		600
	Account Receivable-Marty			600
	(for account written off)
Aug-06	Account Receivable-Marty		600
	Allowance for bad debts			600
	(for account written off recovered)
	Cash		600
	Account Receivable-Marty			600
	(for cash received from malcom)
Dec-31	Allowance for bad debts		3,350
	Account receivable - Billy			1,500
	Account Receivable- Maria			1,400
	Account Receivable- Ronald			450
	(For accounts written off)
Dec-31	Bad debt Expense (550,000*3%)		16,500
	Allowance for bad debts			16,500
	(for bad debts recorded)
Dec-31	Income summary		16,500
	Bad debt expense			16,500
	(for expense closed to Income summary)

Allowance for bad Debts
Particulars	Amount	Particulars	Amount
		2018
		Dec-31	14400
	0		14400
		2019
Jun-29	600	Opening bal:	14400
Dec-31	3350	Aug-06	600
		Dec-31	16500
	3,950		31,500
		Dec-31(ending bal:)	27,550
Bad Debts expense
Particulars	Amount	Particulars	Amount
2018
Dec-31	14400	Dec-31	14400
2019
Dec-31	16500	Dec-31	16500

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