Question

At the beginning of the current period, Oriole Company had balances in Accounts Receivable of $191,500 and in Allowance for Doubtful Accounts of $9,840 (credit). During the period, it had net credit sales of $782,000 and collections of $697,920. It wrote off as uncollectible accounts receivable of $6,591. However, a $2,948 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $23,400 at the end of the period. (Omit cost of goods sold entries. (a)Prepare the entries to record sales and collections during the period. (b)Prepare the entry to record the write-off of uncollectible accounts during the period. (c)Prepare the entries to record the recovery of the uncollectible account during the period. (d)Prepare the entry to record bad debt expense for the period. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts. Ending balance in Accounts Receivable $Enter a dollar amount Ending balance in Allowance for Doubtful Accounts $Enter a dollar amount

Answer 1

The Journal entries are as follows:

(a) (i) Accounts receivable A/c Dr. $782,000

To sales revenue $782,000

(To record sales)

(ii) Cash A/c Dr. $697,920

To Accounts receivable $697,920

(To record receipt)

(b) Allowance for doubtful accounts Dr. $6,591

To Accounts receivable $6,591

(To record the write-off of uncollectible accounts)

(c) (i) Accounts receivable A/c Dr. $2,948

To Allowance for doubtful accounts $2,948

(To reinstate account previously written off)

(ii) Cash A/c Dr. $2,948

To Accounts receivable $2,948

(To record receipt)

(c) Bad debt expense [$23,400 - $6,197] A/c Dr. $17,203

To Allowance for doubtful accounts $17,203

(To record bad debt expense for the period)

Ending balance in accounts receivables:

= Opening balance + sales on account during the period - Collection during the period - write off during the period

= $191,500 + $782,000 - $697,920 - $6,591

= $268,989

Allowance for doubtful accounts unadjusted balance:

= $9,840 + $2,948 - $6,591

= $6,197

Ending balance in Allowance for Doubtful Accounts = $23,400