Question

The balance sheet of Sheffield Company at December 31, 2019, includes the following.

Notes receivable $51,200
Accounts receivable 195,600
Less: Allowance for doubtful accounts 24,600 $222,200
Transactions in 2020 include the following.
1. Accounts receivable of $151,300 were collected including accounts of $67,500 on which 4% sales discounts were allowed.
2. $5,670 was received in payment of an account which was written off the books as worthless in 2019.
3. Customer accounts of $24,800 were written off during the year.
4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,900. This estimate is based on an analysis of aged accounts receivable.
Required:
Prepare all journal entries necessary to reflect the transaction above.

Answer 1

S/n Accounts titles Debit Credit

1. Cash[$151,300 - ($67,500*4%)] $148,600

Sales Discounts ($67,500*4%) $2,700

Accounts Receivable $151,300

2. Accounts Receivable $5,670

Allowance for Doubtful Accounts $5,670

Cash $5,670

Accounts Receivable $5,670

3. Allowance for Doubtful Accounts $24,800

Accounts Receivable $24,800

4. Bad Debt Expense $15,430

Allowance for Doubtful Accounts $15,430

Workings:

$24,600 + $5,670 - $24,800 = $5,470

$20,900 - $5,470 =