Prepare journal entries to record the following transactions: (1) On December 15
ID: 2369467 • Letter: P
Question
Prepare journal entries to record the following transactions:
(1) On December 15, 2008, the company recorded $150,000 sales on credit.
(2) On December 31, 2008, the company estimated bad debt expenses of $15,000.
(3) On January 12, 2009, collect $100,000 worth of accounts receivable.
(4) After many collection attempts, the Company determined on June 15, 2009 that it would not collect $10,000 in accounts receivables from Pendant Publishing. It decided to write-off this account.
(5) On July 15, Pendant Publishing called to say that they have had financial problems but can afford to pay $7,000 to settle their $10,000 debt in full. Vandolay Industries agreed to these terms, and reversed $7,000 of the prior write-off. It received a $7,000 check from Pendant the next day.
Post the above entries to the following T-accounts:
Accounts Receivable
Allowance for Doubtful Accounts
Accounts Receivable
Allowance for Doubtful Accounts
Explanation / Answer
December 15, 2008
Debit Accounts Receivable $ 150,000
Credit Sales Revenue $ 150,000
(Sales on Credit)
December 31,2008
Debit Bad Debt Expense $ 15,000
Credit Allowance for Doubtful Accounts $ 15,000
(Estimated Bad Debt Expense)
January 12, 2009
Debit Cash Account $100,000
Credit Accounts Receivables $100,000
(Collected cash for previous sales)
June 15,2009
Debit Allowance for Doubtful Account $10,000
Credit Accounts Receivable $10,000
($10,000 bad debt written-off)
July 15,2009
Debit Accounts Receivable $7,000
Credit Allowance for Doubtful Account $7,000
(Reversing prior write-off)
July 16,2009
Debit Cash Account $7,000
Credit Accounts Receivable $7,000
(Received check from Pendant Publishing)