Question

Magic Cleaning Co.had these account balances at the end of the calendar year. Account Receivable- $541,300...

Magic Cleaning Co.had these account balances at the end of the calendar year.

Account Receivable- $541,300

Allowance for Bad Debts-$10,912

Transactions:

1. Sales made on credit amounted to $5,456,575

2. Cash sales made during the year amounted to $ $121,214

3. Collections of accounts during the year: actual cash collected $5,381,642, sales discounts allowed $130,004.

4. Wrote off uncollectible accounts amounting to $9,280.

5. Collected $2,340 for an account that had previously been written off.

6. Made the adjusting entry to recognize bad debts based on 1% of net credit sales for the year.

Make entries in general journal form, and post to the Allowance for Bad debts "T" account only.

Business   Accounting   
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Answer #1

Journal entry

No General Journal Debit Credit
1 Account receivable 5456575
Sales revenue 5456575
2 Cash 121214
Sales revenue 121214
3 Cash 5381642
Sales discount 130004
Account receivable 5511646
4 Allowance for doubtful accounts 9280
Account receivable 9280
5 Account receivable 2340
Allowance for doubtful accounts 2340
Cash 2340
Account receivable 2340
6 Bad debt expense (5456575*1%) 54565.75
Allowance for doubtful accounts 54565.75

T account

Allowance for doubtful accounts
Write off 9280 Beg Bal 10912
reinstated 2340
Adjusting entry 54565.75
Ending balance 58537.75
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