Question

At the beginning of the current period, Vaughn Manufacturing had balances in Accounts Receivable of $186,800 and in Allowance for Doubtful Accounts of $9,680 (credit). During the period, it had net credit sales of $872,700 and collections of $697,700. It wrote off as uncollectible accounts receivable of $6,866. However, a $2,837 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $24,470 at the end of the period. (Omit cost of goods sold entries.) Prepare the entries to record sales and collections during the period.

Answer 1

To record sales and collections for Vaughn Manufacturing during the period, journal entries for net credit sales, collections, the write-off of uncollectible accounts, and the recovery of previously written-off accounts are prepared. These transactions include debiting and crediting the appropriate accounts such as Accounts Receivable, Sales Revenue, Cash, and Allowance for Doubtful Accounts.

Step-by-step explanation:

Journal Entries for Vaughn Manufacturing

To prepare the journal entries for Vaughn Manufacturing's sales and collections during the period, we will record several transactions, including net credit sales, collections, the write-off of uncollectible receivables, and the recovery of a previously written-off account.

Recording Net Credit Sales

When Vaughn Manufacturing makes sales on credit, the journal entry is a debit to Accounts Receivable and a credit to Sales Revenue:

• Debit Accounts Receivable for $872,700
• Credit Sales Revenue for $872,700

Recording Collections

The collections on account would be accounted for as follows:

• Debit Cash for $697,700
• Credit Accounts Receivable for $697,700

Write-off of Uncollectible Accounts

When writing off uncollectible accounts receivable:

• Debit Allowance for Doubtful Accounts for $6,866
• Credit Accounts Receivable for $6,866

Recovery of Previously Written-off Account

To record the recovery of an account previously written off:

• Debit Accounts Receivable for $2,837
• Credit Allowance for Doubtful Accounts for $2,837

Adjustment for Year-End Estimate of Uncollectible Accounts

The estimated uncollectibles at the end of the period affect the Allowance for Doubtful Accounts, which is an estimation entry and would be:

• Debit Bad Debt Expense for $24,470
• Credit Allowance for Doubtful Accounts for $24,470

This would bring the Allowance for Doubtful Accounts to the desired year-end balance.