Question
The Blunt Company makes credit sales of 21,000 during themonth of February 2007. During 2007 collections are received onFebruary sales of 20,400, accounts representing $600 of these salesare written off as uncollectable, and a $100 account previouslywritten off is collected. Required Prepare the journal entries necessary to record the precedinginformation if (1) bad debts are estimated as 3% of sales at the ofsale, (2) the bad debts are recorded as they actuallyoccur. The Blunt Company makes credit sales of 21,000 during themonth of February 2007. During 2007 collections are received onFebruary sales of 20,400, accounts representing $600 of these salesare written off as uncollectable, and a $100 account previouslywritten off is collected. Required Prepare the journal entries necessary to record the precedinginformation if (1) bad debts are estimated as 3% of sales at the ofsale, (2) the bad debts are recorded as they actuallyoccur.
Explanation / Answer
1. Accounts Receivable 21,000.00 Sales 21,000.00 Bad Debt Expense (21,000x0.03) 630.00 Allowance for DoubtfulAccounts 630.00 Cash 20,400.00 Accounts Receivable 24,400.00 Allowance for DoubtfulAccounts 600.00 AccountsReceivable 600.00 Accounts Receivable 100.00 Allowance for Doubtful Accounts100.00 Cash 100.00 AccountsReceivable 100.00 2. Accounts Receivable 21,000.00 Sales 21,000.00 Cash 20,400.00 AccountsReceivable 20,400.00 Bad Debt Expense 600.00 AccountsReceivable 600.00 Accounts Receivable 100.00 Bad DebtExpense 100.00 Cash 100.00 AccountsReceivable 100.00