Answer:
- a) Prepare the entries to record sales and collections during the period.
During the period, it had net credit sales of $744,100
Dr Accounts Receivable $ 744,100
Cr SALES $ 744,100
Collections of $829,950
Dr CASH $ 829,950
Cr Accounts Receivable $ 829,950
- (b) Prepare the entry to record the write-off of uncollectible accounts during the period.
It wrote off as uncollectible accounts receivable of $7,798.
Dr Allowance for Uncollectible Accounts $ 7,798
Cr Accounts Receivable $ 7,798
- (c) Prepare the entries to record the recovery of the uncollectible account during the per
However, a $2,979 account previously written off as uncollectible was recovered
Dr Accounts Receivable $ 2,979
Cr Allowance for Uncollectible Accounts $ 2,979
- (d) Prepare the entry to record bad debt expense for the period.
Uncollectible accounts are estimated to total $26,820 at the end of the period
Dr Bad Debt Expense $ 31,639
Cr Allowance for Uncollectible Accounts $ 31,639
Step-by-step explanation:
- a) Prepare the entries to record sales and collections during the period.
The entries to record sales it's a debit to the accounts receivables because it was a credit sales and a credit entry to the Sales Accounts.
- (b) Prepare the entry to record the write-off of uncollectible accounts during the period.
As the company use the Allowance for Uncollectible accounts method that states:
When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Reserve for Bad Accounts (credit)
At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit) with accounts receivable (credit), with this we are recognizing the bad credit of the company.
So, at the momento of the write-off we record a debit entry to the Dr Allowance for Uncollectible Accounts against the accounts receivable to reflect the uncollectible accounts in the balance sheets.
- (c) Prepare the entries to record the recovery of the uncollectible account during the per
If the company recovers the bad debts as a collectible account, then the company had to reverse the last entry when the accounts were declared as bad debt.
- (d) Prepare the entry to record bad debt expense for the period.
Uncollectible accounts are estimated to total $26,820 at the end of the period
Last, to register the new balance of uncollectible accounts it's necessary to consider the balance of the account at the momento of the adjustment.
The Allowance for Uncollectible Accounts must reflect a creit balance of $26,820, as it previously had some movements then the account reflects a credit balance of $4,819 that comes from:
It wrote off as uncollectible accounts receivable of $7,798.
Dr Allowance for Uncollectible Accounts $ 7.798
Cr Accounts Receivable $ 7.798
However, a $2,979 account previously written off as uncollectible was recovered
Dr Accounts Receivable $ 2.979
Cr Allowance for Uncollectible Accounts $ 2.979
To reverse that credit balance it's necessary to register an entry of
Dr Bad Debt Expense $ 31.639
Cr Allowance for Uncollectible Accounts $ 31.639
in this way we end the period with a debit balance of $26,820