Question

what journal entries did steinway record that explain the change in gross accountsreceivable and the allowance for bad debts in year 1? assume all sales were oncredit and please record a separate entry for recoveries.

Answer 1

Journal entries for changes in gross accounts receivable and the allowance for bad debts include recording sales on credit, estimating bad debts, writing off uncollectible accounts, and recording recoveries of previously written-off bad debts.

Step-by-step explanation:

The question pertains to the journal entries that Steinway & Sons would record to reflect the changes in its financial statements, specifically the gross accounts receivable and the allowance for bad debts, during a fiscal year. When a company makes sales on credit, it records the revenues and the corresponding receivables. If some of these receivables later prove to be uncollectible, the company must adjust its records to reflect this. The company may also have recoveries, where previously written-off bad debts are collected.

Typical journal entries include:

1. Sales on credit:
2. Estimation of bad debts:
3. Write-off of uncollectible accounts:
4. Recovery of previously written-off accounts:

The entries for bad debt expense and recoveries adjust the Allowance for Doubtful Accounts and impact the company's net accounts receivable.