Question

The ledger of Costello Company at the end of the current year shows Accounts Receivable $130,000,...

The ledger of Costello Company at the end of the current year shows Accounts Receivable $130,000, Sales Revenue $849,000, and Sales Returns and Allowances $27,000.

There is a credit balance in Allowance for doubtful accounts of $6,500. Costello uses the % of sales method for allowance for bad debts.

Costello will be using 2% of net sales for their adjustment this year.

Record the entry for the allowance at year end
Account Debit Credit

In February, a receivable in the amount of $2,500 is deemed uncollectible and needs to be written off. Below record the journal entry
Account Debit Credit

Much to everyone's surprise, you receive a check in May paying for the written off invoice. Below record the journal entry

hint: this is 2 entries
Account Debit Credit

The ledger of Costello Company at the end of the current year shows Accounts Receivable $130,000, Sales Revenue $849,000, and Sales Returns and Allowances $27,000.

There is a credit balance in Allowance for doubtful accounts of $6,500. Costello uses the % of sales method for allowance for bad debts.

Costello will be using 2% of net sales for their adjustment this year.

Record the entry for the allowance at year end
Account Debit Credit

In February, a receivable in the amount of $2,500 is deemed uncollectible and needs to be written off. Below record the journal entry
Account Debit Credit

Much to everyone's surprise, you receive a check in May paying for the written off invoice. Below record the journal entry

hint: this is 2 entries
Account Debit Credit
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Homework Answers

Answer #1

Journal Entry for allowance at year end:

Particulars Debit ($) Credit($)
Bad Debt Expense 16,440
Allowance for doubtful accounts 16,440
{2% of net sales = (849000 - 27000) * 2%}

Journal Entry for bad debts to be written off :

Particulars Debit ($) Credit($)
Bad Debt Expense 2,500
Accounts Receivable 2,500

Journal Entries for Bad Debts Recovered:

Sr. No. Particulars Debit ($) Credit($)
1. Accounts Receivable 2,500
Bad Debt Expense 2,500
2. Cash 2,500
Accounts Receivable 2,500
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