Question

The December 31, 2021, balance sheet of the Vaughn Manufacturing had Accounts Receivable of $730,000 and a credit balance in Allowance for Doubtful Accounts of $34,000. During 2022, the following transactions occurred: sales on account $1,559,000; sales returns and allowances, $130,000; collections from customers, $1,340,000; accounts written off, $38,000; previously written off accounts of $9,000 were collected.

Journalize the 2022 transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Enter an account title to record sales on account Enter a debit amount Enter a credit amount Enter an account title to record sales on account Enter a debit amount Enter a credit amount (To record credit sales) Enter an account title to record merchandise returned Enter a debit amount Enter a credit amount Enter an account title to record merchandise returned Enter a debit amount Enter a credit amount (To record credits to customers) Enter an account title to record collection of receivables Enter a debit amount Enter a credit amount Enter an account title to record collection of receivables Enter a debit amount Enter a credit amount (To record collection of receivables) Enter an account title to write-off specific accounts Enter a debit amount Enter a credit amount Enter an account title to write-off specific accounts Enter a debit amount Enter a credit amount (To write off specific accounts) Enter an account title to reverse write-off of account Enter a debit amount Enter a credit amount Enter an account title to reverse write-off of account Enter a debit amount Enter a credit amount (To reverse write-off of account) Enter an account title to record collection of account Enter a debit amount Enter a credit amount Enter an account title to record collection of account Enter a debit amount Enter a credit amount (To record collection of account) SHOW LIST OF ACCOUNTS SHOW ANSWER LINK TO TEXT

If the company uses the percentage of receivables basis to estimate bad debt expense and determines that uncollectible accounts are expected to be 9% of accounts receivable, what is the adjusting entry at December 31, 2022? (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 Enter an account title to record the adjusting entry on December 31 Enter a debit amount Enter a credit amount Enter an account title to record the adjusting entry on December 31 Enter a debit amount Enter a credit amount

Answer 1

Solution 1:

S.no.	Particulars	Debit	Credit
1	Accounts Receivable Dr	$15,59,000
	To Sales revenue		$15,59,000
2	Sales Returns and allownaces Dr	$1,30,000
	To Accounts receivable		$1,30,000
3	Cash Dr	$13,40,000
	To Accounts receivable		$13,40,000
4	Allowance for Doubtful Accounts Dr	$38,000
	To Accounts Receivable		$38,000
5	Accounts Receivable Dr	$9,000
	To Allowance for Doubtful Accounts		$9,000
	Cash Dr	$9,000
	To Accounts Receivable		$9,000

Solution 2:

Ending accounts receivable = 730000+1559000-130000-1340000-38000 = $781,000

Ending balance in allowance account before adjustment = 34000 - 38000 + 9000 = $5,000 Credit

S.no.	Particulars	Debit	Credit
31-Dec	Bad Debt Expense Dr [781000*9% - 5000)	$65,290
	To Allowance for Doubtful Accounts		$65,290