Question

EX 8-4 Entries for uncollectible receivables, using allowance method 

Obj. 4 Journalize the following transactions in the accounts of Zippy Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables: SHOW ME HOW 

May 24. Sold merchandise on account to Old Town Cafe, $24,450. The cost of goods sold was $14,500. 

Sept. 30. Received $9,000 from Old Town Cafe and wrote off the remainder owed on the sale of May 24 as uncollectible. 

Dec. 7. Reinstated the account of Old Town Cafe that had been written off on September 30 and received $15,450 cash in full payment.

Answer 1

Journal entry

Date	account and explanation	Debit	Credit
May 24	Account receivable	24450
	Sales revenue		24450
	(To record sales)
	Cost of goods sold	14500
	Inventory		14500
	(To record cost of goods sold)
Sep 30	Allowance for doubtful account	15450
	cash	9000
	Account receivable		24450
	(To record write off)
Dec 7	Account receivable	15450
	Allowance for doubtful accounts		15450
	(To record reinstate)
	Cash	15450
	Account receivable		15450
	(To record collection)

Answer 2