Question

The December 31, 2016, balance sheet of the Kramer Company had Accounts Receivable of $650,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2017, the following transactions occurred: sales on account $1,550,000; sales returns and allowances, $100,000; collections from customers, $1,250,000; accounts written off, $35,000; previously written off accounts of $8,000 were collected.

Journalize the 2017 transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
(To record credit sales)
(To record merchandise returned)
(To record collection of receivables)
(To write off specific accounts)
(To reverse write-off of account)
(To record collection of account)

If the company uses the percentage of receivables basis to estimate bad debt expense and determines that uncollectible accounts are expected to be 6% of accounts receivable, what is the adjusting entry at December 31, 2017? (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31

Answer 1

Account Titles and Explanation	Debit	Credit
Accounts Receivable	1550000
Sales revenue		1550000
(To record credit sales)
Sales returns and allowances	100000
Accounts Receivable		100000
(To record merchandise returned)
Cash	1250000
Accounts Receivable		1250000
(To record collection of receivables)
Allowance for Doubtful Accounts	35000
Accounts Receivable		35000
(To write off specific accounts)
Accounts Receivable	8000
Allowance for Doubtful Accounts		8000
(To reverse write-off of account)
Cash	8000
Accounts Receivable		8000
(To record collection of account)
Account Titles and Explanation	Debit	Credit
Bad Debts expense	42900
Allowance for Doubtful Accounts		42900
Workings:
Ending Accounts Receivable	815000		=650000+1550000-100000-1250000-35000
X % Uncollectible	6%
Estimated Amount Uncollectible	48900
Estimated Amount Uncollectible	48900
Less: Allowance for Doubtful Accounts	6000		=33000-35000+8000
Bad Debts expense	42900