In: Accounting
On January 1, Griffin Company had the following (normal) account balances:
Accounts Receivable: $69,400
Allowance for Bad Debts: 1,270
The bookkeeper, Barbara Jackson, has prepared the following information for the year to assist you in creating a balance sheet.
Credit Sales for the Year: $230,400
Collections of Accounts Receivable: 228,040
Write-off of Bad Debts: 160
Bad Debts Expense for Year: 350
(recorded as an adjusting entry on December 31)
A. Journal Entries Required
1. For Credit Sales of the Year:-
Accounts Receivable $230,400 Dr.
Sales Account $230,400 Cr.
2. For Collections of Accounts Receivable:
Cash / Bank Account $228,040 Dr.
Accounts Receivable $228,040 Cr.
3. For Write-off of Bad Debts:
Allowance for Bad Debts $160 Dr.
Accounts Receivable $160 Cr.
(Note: It is assumed that this is the write off from the provision / allowance for bad debts created in the previous year)
4. Bad Debts Expense for Year:
Bad Debts Account $350 Dr.
Accounts Receivable $350 Cr.
(Note: It is assumed that this is direct write off bad debts without creating any provision / allowance for bad debts)
B. If you need to pass a single Journal Entry for the all the above transactions:
Accounts Receivable $1,850 Dr.
Cash / Bank Account $228,040 Dr.
Allowance for Bad Debts $160 Dr.
Bad Debts Account $350 Dr.
Sales Account $230,400 Cr.
C. Extract of Balance Sheet as of Dec 31
Asset Side: Accounts Receivable $71,250
Liabilities Side OR Minus to Assets Side: Allowance for Bad Debts $1,110