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1a. On June 1,2012, LinkIT Technologies made sales of $50,000 with terms 3/15, n/45. On June...

1a. On June 1,2012, LinkIT Technologies made sales of $50,000 with terms 3/15, n/45. On June 12, the company received full payment for the previous sale. Using the gross method and net method, prepare journal entries.

1b. The trial balances before adjustment are:   

      Accounts receivable Dr. $100,000

      Allowance for doubtful accounts Cr. $    2,500

     Sales (all on credit) Cr. 750,000

     Sales returns and allowances Dr. 40,000

Using these numbers, prepare the entries for estimated bad debts. Assume that doubtful accounts are estimated to be 6% of gross accounts receivable

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Answer #1

1a) Journal entries : Gross method

No Date General Journal Debit Credit
1 June 1 Account receivable 50000
Sales revenue 50000
2 June 12 Cash (50000*97%) 48500
Sales discount 1500
Account receivable 50000

1a) Journal entries : Net method

No Date General Journal Debit Credit
1 June 1 Account receivable 48500
Sales revenue 48500
2 June 12 Cash (50000*97%) 48500
Account receivable 48500

1b) Journal entry

No General Journal Debit Credit
Bad debt expense (100000*6%-2500) 3500
Allowance for doubtful accounts 3500
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