Question

The ledger of Pina Colada Corp. at the end of the current year shows Accounts Receivable $108,000; Sales Revenue $832,000; and Sales Returns and Allowances $18,100. Prepare journal entries for each separate scenario below.

(a)

If Pina Colada Corp. uses the direct write-off method to account for uncollectible accounts, journalize the entry at December 31, assuming Pina Colada Corp. determines that L. Dole’s $1,000 balance is uncollectible.

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
(a)	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
(b)	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
(c)	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

Determine the ending balance Accounts Receivable and Allowance for Doubtful Accounts

(b)

If Allowance for Doubtful Accounts has a credit balance of $2,000 in the trial balance, journalize the adjusting entry at December 31, assuming uncollectible accounts are estimated to be 11% of accounts receivable.

(c)

If Allowance for Doubtful Accounts has a debit balance of $199 in the trial balance, journalize the adjusting entry at December 31, assuming uncollectible accounts are estimated to be 8% of accounts receivable.

(a)
(b)
(c)

Answer 1

Answer
	Account Title	Debit	Credit
a	Bad debts expense	$     1,000
	Accounts Receivable		$     1,000
b	Bad debts expense	$     9,880		(108000*11%)-2000
	Allowance for Doubtful accounts		$     9,880
c	Bad debts expense	$     8,839		(108000*8%)+199
	Allowance for Doubtful accounts		$     8,839