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Liang Company began operations on January 1, 2015. During its first two years, the company completed...

Liang Company began operations on January 1, 2015. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.

2015

Sold $1,350,300 of merchandise (that had cost $975,800) on credit, terms n/30.

Wrote off $19,300 of uncollectible accounts receivable.

Received $671,600 cash in payment of accounts receivable.

In adjusting the accounts on December 31, the company estimated that 1.10% of accounts receivable will be uncollectible.

2016

Sold $1,513,800 of merchandise (that had cost $1,303,100) on credit, terms n/30.

Wrote off $32,600 of uncollectible accounts receivable.

Received $1,114,000 cash in payment of accounts receivable.

In adjusting the accounts on December 31, the company estimated that 1.10% of accounts receivable will be uncollectible.

Required:

Prepare journal entries to record Liang’s 2015 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.)

Prepare journal entries to record Liang’s 2016 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.)

Solutions

Expert Solution

Beginning accounts receivable 0
Net credit sales 1350300
1350300
Cash received -671600
Accounts written off -19300
Ending accounts receivable 659400
Ending accounts receivable 659400
Percentage uncollected 1.10%
Ending allowance for doubtful accounts 7253
2015
1 Allowance for dobtful accounts 19300
            Accounts receivable 19300
2 Bad debt expense 26553 (7253+19300)
            Allowance for doubtful accounts 26553
2016
Beginning accounts receivable 659400
Net credit sales 1513800
2173200
Cash received -1114000
Accounts written off -32600
Ending accounts receivable 1026600
Ending accounts receivable 1026600
Percentage uncollected 1.10%
Ending allowance for doubtful accounts 11293
4 Ending allowance for doubtful accounts 11293
Add Accounts receivable written off 32600
43893
Less Beginning allowance for douvtful accounts 7253
Bad debt expense 36639
2016
1 Allowance for dobtful accounts 32600
            Accounts receivable 32600
2 Bad debt expense 36639
            Allowance for doubtful accounts 36639

ekkarill92 answered 1 year ago
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