Question

Journal Entries for Credit Losses

At January 1, the Blake Company had the following accounts on its books:

Accounts Receivable	$130,000	Debit
Allowance for Doubtful Accounts	$7,000	Credit

During the year, credit sales were $850,000 and collections on account were $794,000. The following transactions, among others, occurred during the year:

Jan.11	Wrote off J. Wolf's account,	$3,000
Apr.29	Wrote off B. Avery's account,	$2,000
Nov.15	Received $1,000 from B. Avery to pay a debt that had been written off April 29. This amount is not included in the $794,000 collections.
Dec.05	Wrote off D. Wright's account,	$2,250
Dec.31	In an adjusting entry, recorded the allowance for doubtful accounts at	1%
	of credit sales for the year.

Required

a. Prepare the journal entries to record the credit sales, the collections on account, the transactions, and the adjustment.

b. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on the December 31 balance sheet.

a.

General Journal
Date	Description	Debit	Credit
Dec.31	Answer

Answer	Answer
	Answer

Answer	Answer
	To record sales revenue for the year.
Dec.31	Answer

Answer	Answer
	Answer

Answer	Answer
	To record collections on account for the year.
Jan.11	Answer

Answer	Answer
	Answer

Answer	Answer
	To write off J. Wolf's account.
Apr.29	Answer

Answer	Answer
	Answer

Answer	Answer
	To write off B. Avery's account.
Nov.15	Answer

Answer	Answer
	Answer

Answer	Answer
	To reinstate B. Avery's account.
Nov.15	Answer

Answer	Answer
	Answer

Answer	Answer
	To record collection from B. Avery.
Dec.05	Answer

Answer	Answer
	Answer

Answer	Answer
	To write-off D. Wright's account.
Dec.31	Answer

Answer	Answer
	Answer

Answer	Answer
	To record allowance for doubtful accounts.

b.

Answer

Answer
	Answer

Answer
		Answer

Answer 1

Answer:

a.)

General Jouranl

Date	Particulars	Debit ($)	Credit ($)`
Dec 31	Accounts Receivable	850000
	Sales Revenue		850000
	(To record sales revenue for the year)
Dec 31	Cash	794000
	Accounts Receivable		794000
	(To record collections on account for the year)
Jan 11	Allowance for Doubtful Accounts	3000
	Accounts Receivable - J Wolf		3000
	(To write off J Wolf's account)
Apr 29	Allowance for Doubtful Accounts	2000
	Accounts receivable - B. Avery		2000
	(To write off b Avery's Account)
Nov 15	Accounts Receivable - B.Avery	1000
	Allowance for Doubtful Accounts		1000
	(To reinstate B. Avery's account for partial recovery)
Nov 15	Cash	1000
	Accounts Receivable - B. Avery		1000
	(To record collection from B.Avery's)
Dec 05	Allowance for Doubtful Accounts	2250
	Accounts Receivable - D. Wright		2250
	(To wite off D. Wright's account)
Dec 31	Bad deb Expense	8500
	Allowance for Doubtful Accounts		8500
	(To record allowance for doubtful accounts)

b.)

Accounts Receivable (130000+850000-794000-3000-2250)	180750
Less: Allowance for Doubtful Accounts (7000-3000-2000+1000-2250+8500)	9250
	171500