Question

a) Apple Co. is preparing 2019 financial statements. During 2019. Apple made $2,500,000 credit sales. Its...

a) Apple Co. is preparing 2019 financial statements. During 2019. Apple made $2,500,000 credit sales. Its accounts receivable and allowance for doubtful accounts balances on December 31, 2019 are as follows:

Accounts receivable 360,000 (Debit)

Allowance for doubtful accounts 3,500 (Debit)

Management estimates that 5% of accounts receivable will be uncollectible.

Please prepare the adjusting journal entry to record bad debt expense for 2019.

b) On February 15th, 2020, Lucky Store, one of its customers, filed bankruptcy and the Apple co. management determines that its unpaid accounts receivable $3,500 should be written off.

Please prepare the journal entry for write-off

c ) On April 1, Lucky informed that a new investor injected cash to the company and it is paying back $3,500.

Please prepare the journal entry for the receipt of $3,500.

Homework Answers

Answer #1

Solution:-

Date Particulars Debit ($) Credit ($)
Dec 31 2019 Uncollectible Accounts Dr. 18,000
To Allowance for doubtful accounts 18,000
For allowance for doubtful accounts created
Feb 15 2020 Allowance for doubtful accounts Dr. 3,500
To Account Receivable A/c 3,500
(For bad debts written off against allowance)
April1 2020 Cash A/c Dr. 3,500
To Bad debts recovered A/c 3,500
(For receipt of amount from previously declared bad debts)
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