Question

Prepare journal entries to record the following items affecting the Allowance for Bad Debts account for Chief Ugundi. Show work on calculations supporting your amounts. Chief Ugundi reported $500,000 as total credit sales for the period with related costs of $350,000. Account Debit Credit Calculate the Gross margin % on the above sales ________. Based on past experience, he estimated that 4% of total credit sales would NOT be collected. Account Debit Credit Chief Ugundi gave up trying to collect what Gilligan owed him for previous purchases and decided to write off the account balance in full. The amount owed totaled $6,000. Account Debit Credit Chief Ugundi received $2,000 from Gilligan after he had written off the account in full. Account Debit Credit After Chief Ugundi threatens to have the local witchdoctor perform voodoo on them, the Howell’s sign a note receivable earning 12% for $8,000 remaining on their account. The entire note receivable balance is due in 6 months. Account Debit Credit Mrs. Howell took Chief Ugundi’s threat seriously and paid the $8,000 owed plus interest when the note became due in 6 months. Record the receipt of Cash below. Account Debit Credit For the next year, Chief Ugundi estimated that the allowance for bad debts at the end of the period should equal 15% of the accounts receivable balance. At the end of the period, the total for Accounts Receivables was $200,000 and the amount in the allowance for bad debts was $7,000. Account Debit Credit Chief Ugundi gave up trying to collect what the Skipper owed him for previous purchases and decided to write off the account balance in full. The amount owed totaled $5,000. Account Debit Credit Chief Ugundi received $3,000 from the Skipper after he had written off the account in full. Account Debit Credit After Chief Ugundi threatens to have the local witchdoctor perform voodoo on them, Ginger and Mary Ann sign a note receivable earning 10% for $12,000 remaining on their account. The entire note receivable balance is due in 8 months. Account Debit Credit Neither Ginger nor Mary Ann took Chief Ugundi’s threat seriously and decided NOT to pay the $12,000 owed. Accordingly, the note was recorded as dishonored when the note became due in 8 months. Account Debit Credit Chief Ugundi wrote off the delinquent account with Ginger and Mary Ann after all castaways were rescued from the island. Account Debit Credit

Answer 1