Question

Liang Company began operations on January 1, 2016. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. 2016 a. Sold $1,347,500 of merchandise (that had cost $975,700) on credit, terms n/30 b. Wrote off $18,700 of uncollectible accounts receivable. c. Received $666,200 cash in payment of accounts receivable. d. In adjusting the accounts on December 31, the company estimated that 2.50% of accounts receivable will be uncollectible. 2017 e. Sold $1,589,700 of merchandise (that had cost $1,266,700) on credit, terms n/30. f. Wrote off $28,100 of uncollectible accounts receivable. g. Received $1,202,000 cash in payment of accounts receivable. h. In adjusting the accounts on December 31, the company estimated that 2.50% of accounts receivable will be uncollectible. Required: Prepare journal entries to record Liang's 2016 and 2017 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.) Complete this question by entering your answers in the tabs below. JE 2016 JE 2017 Prepare journal entries to record Liang's 2017 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) View transaction list Journal entry worksheet 2 3 4 5 Sold $1,589,700 of merchandise on credit, terms n/30. Note: Enter debits before credits. General Journal Debit Credit Transaction e(1)

Answer 1

Date		Account titles and explanation		Debit(in $)	Credit(in $)
a.1	2016	Accounts Receivable		13,47,500				Note 1:
		Cash			13,47,500			Beginning Accounts Receivable	$0
								Add:Sales	$13,47,500
a.2	2016	Cost of goods sold		9,75,700				Less:Cash payment received	$6,66,200
		Merchandise Inventory			9,75,700			Less:Bad debts written off	$18,700
								Closing Accounts Receivable	$6,62,600
b	2016	Allowance for doubtful debts		18,700				Uncollectible Percent	2.50%
		Accounts Receivable			18,700			Required ending allowance($662,600*2.50%)	$16,565
								Unadjusted balance	$18,700
c	2016	Cash		6,66,200				Adjustment to the allowance	$35,265
		Accounts Receivable			6,66,200
d	2016	Bad debt expenses(Note 1)		35,265
		Allowance for doubtful debts(Note 1)			35,265
Date		Account titles and explanation		Debit(in $)	Credit(in $)
e.1	2017	Accounts Receivable		15,89,700				Note 2:
		Cash			15,89,700			Beginning Accounts Receivable	$6,62,600
								Add:Sales	$15,89,700
e.2	2017	Cost of goods sold		12,66,700				Less:Cash payment received	$12,02,000
		Merchandise Inventory			12,66,700			Less:Bad debts written off	$28,100
								Closing Accounts Receivable	$10,22,200
f	2017	Allowance for doubtful debts		28,100				Uncollectible Percent	2.50%
		Accounts Receivable			28,100			Required ending allowance($662,600*2.50%)	$25,555
								Unadjusted balance	$11,535
g	2017	Cash		12,02,000				Adjustment to the allowance	$37,090
		Accounts Receivable			12,02,000
h	2017	Bad debt expenses(Note 2)		37,090
		Allowance for doubtful debts(Note 2)			37,090