Question

Please show all supporting computations. Points will be deducted if you do not show your work. 1. The December 31, 2018 balance sheet for Campbell, Inc. included the following: Debit Credit Accounts receivable $ 145,000 Allowance for doubtful accounts 12,500 1 12.50 During 2019, the following transactions occurred: 1. Sales on account $760,000. Campbell uses the gross method for sales recording. 2. Sales returns and allowances, S37,000 3. Collections from customers, S695,000 of which S65,000 qualified for a 1% discount. 4. Accounts written off, $15,000. 65000X 650 5. Previously written off accounts of $3,500 were collected. 64.350 6. At year-end, the allowance for doubtful accounts was estimated to need a balance equal to 6.5% of the gross ending accounts receivable balance. 145,00 Dyl:57.9425 allowance Journalize the 2019 transactions. Disregard any impact on inventory. (3 points) Entry # Account Titles Debit Credit Alle Receivable 700,000 194 I sales revence 760 poo 2 sales returns & allowances 32,000 -3075 2 Acct receivable 137,000 Cash 37.000 I acct receivabu 37.000 3 acct receivable 1695,000 1694,350 Los uwance for downtut dlounts 15.000 unds Civable 15.DOO - accounts receivable 3500 Ou dwonus 13500 cash 3500 O counts receivable 3500 I bod debt expense 3015 6 allowanca for doubtful accts, 3015 991

Answer 1

В 1 Journal Entries: 2 No. Account Titles and Explanation 1 Accounts receivable Sales revenue (To record sales on account) Debit $760,000 Credit $760,000 $37,000 Sales returns and allowances Accounts receivable (To record sales returns and allowances) $37.000 S694.350 $650 Cash Sales discounts Accounts receivable (To record cash collected) $695,000 $15.000 Allowance for doubtful accounts Accounts receivable (To record accounts written off) $15,000 $3.500 Accounts receivable Allowance for doubtful accounts (To record accounts written back) $3,500 $3,500 Cash Accounts receivable (To record cash collected) $3,500 $9,270 Bad debt expense (refer working note below) Allowance for doubtful accounts (To record bad debt expense) $9,270 WORKING NOTE Gross accounts receivable balance Expected allowance percentage Ending balance of allowance for doubtful accounts Less: Current balance of allowance for doubtful accounts Bnad debt expense $158,000 6.50% $10.270 $1.000 S9.270

Calculations are shown below: Debit Credit 1 Journal Entries: 2 No. Account Titles and Explanation 3 1 Accounts receivable 4 Sales revenue T o record sales on account) 760000 =C3 5 37000 Sales returns and allowances Accounts receivable To record sales returns and allowances) =C7 7 2 8 9 10 11 3 12 =D13-C12 =65000*1% Cash Sales discounts Accounts receivable To record cash collected) 13 14 16 4 15000 17 Allowance for doubtful accounts Accounts receivable (To record accounts written off) -C16 18 19 20 5 3500 Accounts receivable Allowance for doubtful accounts (To record accounts written back) =C20 =C20 I Cash Accounts receivable (To record cash collected) C24 =C37 28 6 29 30 Bad debt expense (refer working note below) Allowance for doubtful accounts (To record bad debt expense) =C28 WORKING NOTE Gross accounts receivable balance |=145000+C3-D8-D13-D17+C20-D25 Expected allowance percentage 0.065 Ending balance of allowance for doubtful accounts =C33*C34 Less: Current balance of allowance for doubtful accounts =12500-C16+D21 Bnad debt expense =C35-C36