Question

Entries for Uncollectible Receivables, using Allowance Method:

Journalize the following transactions in the accounts of Sedona Interiors Company, a Restaurant Supply Company that uses the allowance method of accounting for uncollectible receivables:

May 1.	Sold merchandise on account to Palace Co., $17,300. The cost of the merchandise sold was $12,500.
Aug. 30.	Received $3,800 from Palace Co. and wrote off the remainder owed on the sale of May 1 as uncollectible.
Dec. 8.	Reinstated the account of Palace Co. that had been written off on August 30 and received $13,500 cash in full payment.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

Journal entry

Date	account and explanation	Debit	Credit
May 1	Account receivable-Palace Co	17300
	Sales revenue		17300
	(To record sales)
	Cost of goods sold	12500
	Inventory		12500
	(To record cost of goods sold)
Aug 30	Cash	3800
	Allowance for doubtful account	13500
	Account receivable-Palace Co		17300
	(To record collection and write off)
Dec 8	Account receivable-Palace Co	13500
	Allowance for doubtful accounts		13500
	(To record reinstated)
	Cash	13500
	Account receivable-Palace Co		13500
	(to record collection)