Question

Journal Entries for Credit Losses At the beginning of the year, Whitney Company had the following accounts on its books:

Accounts Receivable	$154,000	Debit
Allowance for Doubtful Accounts	$7,900	Credit
During the year, credit sales were:	$1,133,000
and collections on account were:	$1,120,000

The following transactions, among others, occurred during the year:

Feb.17	Wrote off R. Lowell's account,	$3,300
May.28	Wrote off G. Boyd's account,	$2,100
Oct.13	Received $500 from G. Boyd, who is in bankruptcy proceedings,
	in final settlement of the account written off on May 28.
	This amount is not included in the $1,120,000 collections.
Dec.15	Wrote off K. Marshall's account,	$1,400
Dec.31	In an adjusting entry, recorded the allowance for doubtful accounts at	0.5%
	of credit sales for the year.

Required

a. Prepare journal entries to record the credit sales, the collections on account, and the preceding transactions and adjustment.
b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.

a.

General Journal
Date	Description	Debit	Credit
Dec.31	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To record sales revenue for the year.
Dec.31	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To record collections on account for the year.
Feb.17	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To write off R. Lowell's account.
May.28	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To write off G. Boyd's account.
Oct.13	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To reinstate G. Boyd's account for partial recovery.
Oct.13	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To record collection from G. Boyd.
Dec.15	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To write-off K. Marshall's account.
Dec.31	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	AnswerAccounts ReceivableAccounts Receivable - G. BoydAccounts Receivable - K. MarshallAccounts Receivable - R. LowellAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue	Answer	Answer
	To record allowance for doubtful accounts.

b.

	AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts	Answer
	AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts	Answer
		Answer

Answer 1

	Particulars	Debit	Credit
Dec-31	Accounts receivable	1133000
	Sales revenue		1133000
Dec-31	Cash	1120000
	Accounts receivable		1120000
Feb-17	Allowance for doubtful accounts	3300
	Accounts receivable R.lowell		3300
May-28	Allowance for doubtful accounts	2100
	Accounts receivable G. Boyd		2100
Oct-13	Accounts receivable G. Boyd	500
	Allowance for doubtful accounts		500
Oct-13	Cash	500
	Accounts receivable G. Boyd		500
Dec-15	Allowance for doubtful accounts	1400
	Accounts receivable K. Marshall		1400
Dec-31	Bad debt expense	5665	(1133000*.5%)
	Allowance for doubtful accounts		5665
Date		Accounts receivable	Allowance for doubtful accounts
01-Jan	Beginning balance	154000	7900
Dec-31	Credit sales	1133000
Dec-31	Cash collection	-1120000
Feb-17	Write off R.lowell	-3300	-3300
May-28	Write off G. Boyd	-2100	-2100
Oct-13	Final settlement	500	500
Oct-13	Cash received	-500
Dec-15	Write off K marshall	-1400	-1400
Dec-31	Bad debt expense		5665
	Ending balance	160200	7265
b
	Accounts receivable	160200
Less	Allowance for doubtful accounts	7265
	Net accounts receivable	152935