Question

Smith’s Restaurant Supply Corp. manufacturer a variety of stainless steel food services products. They make all sales on 30-day credit terms. Annual sales in 2019 are $30,000,000. At the end of 2018, accounts receivable were presented in the company's balance sheet as follows. Accounts receivable from clients $ 3,100,000 Less: Allowance for doubtful accounts 80,000 During 2019, $160,000 of specific accounts receivable were written off as uncollectible. Of the accounts written off, receivables totaling $16,000 were subsequently collected after they were written off, later in the year. At the end of the year, an aging of accounts receivable indicated a need for a $224,000 allowance to cover possible failure to collect the accounts currently outstanding. Required: Prepare the following general journal entries: 1. One entry to summarize all accounts written off against the Allowance for Doubtful Accounts during 2019. 2. The entries to record the $16,000 in accounts receivable that were subsequently collected. 3. The adjusting entry required at December 31, 2019, to increase the Allowance for Doubtful Accounts to $228,000. If no entry is required for a transaction or event, enter "No journal entry required."

Answer 1

Journal entries:
Accounts title and explanations					Debit $	Credit $
Allowance for Uncollectible account Dr.					160000
Accounts receivable Account						160000
Accounts receivable Account Dr.					16000
Allowance for uncollectible account						16000
(for reinstating the account)
Cash Account Dr.					16000
Accounts recievable Account						16000
Bad debts expense Account Dr.					288,000
Allowance for uncollectible account						288000
Note:
Balance in Allowance:
Beginning balance in Allowance:					80000
Add: Reinstated account					16000
Less: Account written off					160000
Debit balance in Allowance					64000
Required balance in Aallowance at the end					224000
Bad debts expense (64000+224000)					288000