Question

At the beginning of the current period, Vaughn Manufacturing had balances in Accounts Receivable of $210,000 and in Allowance for Doubtful Accounts of $12,000 (credit). During the period, it had net credit sales of $665,000 and collections of $592,000. It wrote off as uncollectible accounts receivable of $5,700. However, a $3,300 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $21,000 at the end of the period. (

a) Prepare the entries to record sales and collections during the period.

(b) Prepare the entry to record the write-off of uncollectible accounts during the period.

(c) Prepare the entries to record the recovery of the uncollectible account during the period.

(d) Prepare the entry to record bad debts expense for the period.

Answer 1

1. Journal entry to record sales

Accounts receivable	$   665,000
Sales		$   665,000

Journal entry to record cash receipt

Cash	$   592,000
Accounts receivable		$   592,000

2.Journal entry to write off receivable

Allowance for doubtful accounts	$       5,700
Accounts receivable		$       5,700

3.Journal entry to reinstate written off amount

Accounts receivable	$       3,300
Allowance for doubtful accounts		$       3,300

Journal entry to record collection

Cash	$       3,300
Accounts receivable		$       3,300

4.Journal entry to record baddebt expenses

Baddebt expenses ($21,000-12,000+5,700-3,300)	$     11,400
Allowance for doubtful accounts		$     11,400

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