Question

The Tanner Company provided the following information for 2019, after year-end adjustments.

• Allowance for doubtful accounts was $11,000 at the beginning of the year, and $30,000 at the end of the year.
• Accounts receivable (gross) were $80,000 at the beginning of the year, and $420,000 at the end of the year.
• Accounts written off as uncollectible during the year were $10,000.
• Sales totaled $2,700,000. Half of the sales were in cash; half were on credit. Like all temporary income statement accounts, the beginning balance was $0.
• Sales discounts were $100,000 and applied equally to cash and credit sales.

a). Which of the following describes the journal entry that Tanner Company uses to write off accounts determined to be uncollectible?

Multiple Choice

• Debit bad debt expense ( ) 10,000

• Debit sales returns and allowances ( ) 10,000

• Debit accounts receivable ( ) 29,000

• Credit sales returns and allowances ( ) 29,000

• Credit accounts receivable ( ) 10,000

• Credit bad debt expense ( ) 29,000

• Debit allowance for doubtful accounts ( ) 29,000

• Credit allowance for doubtful accounts ( ) 10,000

b).Which of the following is true about the journal entry or T accounts when Tanner Company records its sales for the year? (The debits and credits in the journal entry directly correspond to the debits and credits recorded in the T-accounts.)

Multiple Choice

• Debit cash for $1,350,000.

• Credit sales discount for $100,000.

• Debit sales revenue for $2,700,000.

• Debit accounts receivable for $1,300,000.

• Credit sales revenue for $2,600,000.

Answer 1

Requirement (a):

Answer: Credit accounts receivable by $ 10,000

Entry:

Date	Account Titles and explanations	Debit	Credit
	Allowance for doubtful accounts	$               10,000
	Accounts receivable		$         10,000
	(To record write off)

Requirement (b):

Answer: Debit cash for $1,350,000.

Entry:

Date	Account Titles and explanations	Debit	Credit
	Cash	$          1,350,000
	Accounts receivable	$          1,350,000
	Sales Revenue		$   2,700,000
	(To record sales made on account)