Question

>Prepare t-accounts for cash, A/R, the allowance for DA, Income statement

>Prepare journal entries for each situation

>Find net accounts receivable

-Nonprofit organization begins 2019 with a balance in A/R of $14,000.

-The company has an allowance for doubtful accounts beginning balance of 2000.

-During 2019, the company has credit sales of $300,000.

-Bad debt expense is 2% of credit sales.

-Cash collections of A/R are $290,000.

-Accounts written off were 4500 for the year.

Answer 1

Solution:

                                             Journal Entries

Accounts and Explanation	Debit ($)	Credit ($)
Accounts Receivable	300,000
Sales		300,000
(Credit Sales)
Bad debt expense	6,000
Accounts Receivable		6,000
(Bad debt expense is 2% of credit sales)
Cash	290,000
Accounts Receivable		290,000
(Cash collections of Accounts Receivable)
Allowance for Doubtful Accounts	4,500
Accounts Receivable		4,500
(Accounts written off)

T-accounts

Cash
Particulars	Amount ($)	Particulars	Amount ($)
Accounts Receivable	290,000
(Cash Collected)
		Ending Balance	290,000
	290,000		290,000
Accounts Receivable
Particulars	Amount ($)	Particulars	Amount ($)
Opening Balance	14,000	Bad debt expense	6,000
Sales	300,000	Cash	290,000
		Allowance for Doubtful Accounts	4,500
		Ending Balance	13,500
,	314,000		314,000
Allowance for Doubtful Accounts
Particulars	Amount ($)	Particulars	Amount ($)
Accounts Receivable	4,500	Opening Balance	2,000
(Accounts written off)
		Ending Balance	2,500
	4,500		4,500

Net Accounts Receivable = $13,500

Income Statement

Particulars	Amount ($)
Sales	300,000
Less: Bad debt expense	6,000
Allowance for Doubtful accounts	4,500
Net Income	289,500