Question

May 1. Sold merchandise on account to Taiwan Palace Co., $36,000. The cost of the merchandise sold was $23,540. Aug. 30. Received $10,380 from Taiwan Palace Co. and wrote off the remainder owed on the sale of May 1 as uncollectible. Dec. 8. Reinstated the account of Taiwan Palace Co. that had been written off on August 30 and received $25,620 cash in full payment. Required: Journalize the above transactions in the accounts of Arizona Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables. Refer to the chart of accounts for the exact wording of the account titles. KNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. KNOW journals will automatically indent a credit entry when a credit amount is entered.

Answer 1

Answer: See explanation

Step-by-step explanation:

The journal entry will be prepared as follows:

May 1:

Dr Account receivable $36000

Cr Sales $36000

(To record sales)

Dr Cost of goods sold $23540

Cr Inventory $23540

(To record cost of goods sold)

August 30:

Dr Cash $10380

Dr Allowance for doubtful accounts $25620

Cr Account receivable $36000

(To record collection and written off)

December 8:

Dr Account receivable $25620

Cr Allowance for doubtful accounts $25620

(To record reinstatement)

Dr Cash $25620

Cr Account receivable $25620

(To record collection)