The trial balance of Sporting House, Inc. shows a $50,000 outstanding balance in Accounts Receivable at...

The trial balance of Sporting House, Inc. shows a $50,000 outstanding balance in Accounts Receivable at the end of 2016. During 2017, 60% of the total credit sales of $2 million was collected, and no receivables were written off as uncollectible. The company estimated that 1.5% of the credit sales would be uncollectible. During 2018, the account of Larry Johnson, who owed $600, was judged to be uncollectible and was written off. At the end of 2018, the amount previously written off was collected in full from Mr. Johnson.

1) Prepare the journal entry needed at 12/31/17.

2) Prepare the journal entry for the write-off of Johnson’s account.

3) Prepare the journal entry for the collection from Johnson.

Solutions

Expert Solution

2017

1) Accounts Receivables Dr. 2000000

To Sales 2000000

(Being Credit sales Recorded)

Cash Dr. 1200000

To Accounts Receivables 1200000

(Being Cash received)

Bad debt expense Dr. 30000

To Allowance for doubtful debts Dr. 30000 ( 2000000*1.5%)

( being provisions for bad debt made @ 1.5%)

2) 2018

Allowance for doubtful debts Dr. 600

To Accounts Receivables A/c 600

( Being Amount written off and adjusted against previously recorded Allowance for doubtful debt)

3) Cash Dr. 600

To Bad debts Recovered 600

( Being amount earlier written off now recovered)

Bad debts recovered Dr. 600

To Bad debts expense 600

ekkarill92 answered 2 years ago

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