Question

(Journalize Various Accounts Receivable Transactions) The balance sheet of Starsky Company at December 31, 2016, includes the following.

Notes receivable		$ 36,000
Accounts receivable		182,100
Less: Allowance for doubtful accounts		17,300		$200,800

Transactions in 2017 include the following.

1. Accounts receivable of $138,000 were collected including accounts of $60,000 on which 2% sales discounts were allowed.

2. $5,300 was received in payment of an account which was written off the books as worthless in 2016.

3. Customer accounts of $17,500 were written off during the year.

4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable.

Instructions

Prepare all journal entries necessary to reflect the transactions above.

Answer 1

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Event	Account	Debit	Credit
1	Cash	$136,800
	Sales Discount	$    1,200
	Accounts Receivable		$138,000
	(To record collection)
	Without Discount $138,000-$60,000		$ 78,000
	Discount $60,000-2%		$ 58,800
	Total Receipt		$136,800
2a	Accounts Receivable	$    5,300
	Allowance for doubtful accounts		$    5,300
	(To record reinstatement of written off accounts)
2b	Cash	$    5,300
	Accounts Receivbale		$    5,300
	(To record collection against written off accounts)
3	Allowance for doubtful accounts	$ 17,500
	Accounts Receivbale		$ 17,500
	(To record accounts written off)
4	Bad Debt Expense	$ 14,900
	Allowance for doubtful accounts		$ 14,900
	(To record bad debt expense)
	Beginning Allowance Balance		$ 17,300
	Add: Reinstatement of already written off accounts		$    5,300
	Less: Accounts written off during the year		$ -17,500
	Unadjusted ending balance		$    5,100
	Less: Adjusted ending balance		$ 20,000
	To be recorded		$ 14,900