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Liang Company began operations on January 1, 2014. 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. 2014
a. Sold $1,345,600 of merchandise (that had cost $984,600) on credit, terms n/30.
b. Wrote off $18,400 of uncollectible accounts receivable.
c. Received $666,500 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.50% of accounts receivable will be uncollectible. 2015
e. Sold $1,524,200 of merchandise (that had cost $1,296,200) on credit, terms n/30.
f. Wrote off $27,000 of uncollectible accounts receivable.
g. Received $1,200,200 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.50% of accounts receivable will be uncollectible.

Respuesta :

TomShelby

Answer:

a.- part I

accounts receivable   1,345,600 debit

            sales revenues                     1,345,600 credit

a.- part II

cost of goods sold      984,600 debit

           inventory                                984,600 credit

b.- allowance for uncollectible ammounts 18,400 debit

                     accounts receivables                   18,400 credit

c.- Cash                           666,500 debit

          Accounts Receivable           666,500 credit

d.- Bad debt expense       25,007 debit

        Allowance for uncollectible ammounts  25,007 credit

2015

e.- part I

accounts receivable   1,524,200 debit

            sales revenues                     1,524,200 credit

e.- part II

cost of goods sold      1,296,200 debit

           inventory                                 1,296,200 credit

f.- allowance for uncollectible ammounts  27,000 debit

                     accounts receivables                   27,000 credit

g.- Cash                         1,200,200 debit

          Accounts Receivable         1,200,200 credit

h.- Bad debt expense       13,055‬‬ debit

        Allowance for uncollectible ammounts  13,055‬‬ credit

Explanation:

We need to do the journal for each transactions:

the sales credit sales revenue and debit accounts receivable which is an assets.

Then, we do the cost of good sold which are expenses thus, debited and the inventory decreases as the goods we sold leave the ccompany we transfer the ownership to the customer.

Then we collect and decrease accounts receivable and increase cash.

As the company usesd the allowance method It will recognize bad debt expense at year-end when doing a write-off will debit the allowance.

2014:

before adjusting Account receivable balance

1,345,600 - 18,400 wrote-off - 666,500 collected = 660,700

estimated 1.5% as uncollectible:

660,700 x 1.5% = 9.910,5‬

current allwoance balance: 18,400 debit

adjusmtent: 18,400 + 9.910,5‬ = 28.310,5‬

2015:

before adjusting Account receivable balance

660,700 beginning  + 1,524,200 sales - 27,000 wrote off - 1,200,200 receivables = 957.700‬

estimated 1.5% as uncollectible:

957,700 x 1.5% = 14,365.5

allowance adjusting entry:

14,365.5  - (28,310.5 - 27,000 ) = 13.055‬

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