Question

Journalize Various Accounts Receivable Transactions the balance sheet of Starsky Company at December 31, 2010, includes the following.

Notes receivable $ 36,000
Accounts receivable 182,100
Less: Allowance for doubtful accounts 17,300 200,800
Transactions in 2010 include the following.
1. Accounts receivable of $138,000 was collected including accounts of $60,000 on which 2% sales discounts were allowed.
2. $5,300 was received in payment of an account which was written off the books as worthless in 2010.
3. Customer accounts of $17,500 were written off during the year.
4. At year-end the Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable.

Prepare all journal entries necessary to reflect the transactions above.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Cash Dr, $136,800

Sales Discount Dr, $1,200 ($60000 × 2%)

To Accounts receivable $138,000

(Being cash and sales discount is recorded)

For recording this we debited the cash as it increased the assets and at the same time it reduced the assets so account receivable is credited and the sales discount is also debited

2. Accounts receivable Dr, $5,300

To Allowance for doubtful accounts $5,300

(Being allowance for doubtful debts is recorded)

For recording this we debited the account receivable as it increased the assets and at the same time it reduced the assets so allowance for doubtful accounts is credited

Cash Dr, $5,300

To Accounts receivable $5,300

(Being cash receipts is recorded)

For recording this we debited the cash as it increased the assets and at the same time it reduced the assets so account receivable is credited

3. Allowance for doubtful accounts Dr, $17,500

To Accounts receivable $17,500

(Being written off amount is recorded)

For recording this we debited the allowance for doubtful debts as it increased the assets and at the same time it reduced the assets so account receivable is credited

4 Bad Debts expense $14,900 ($20,000 - ($17,300 + $5,300 - $17,500)

To Allowance for doubtful accounts $14,900

(Being bad debt expense is recorded)

For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so allowance for doubtful debt is credited