Question

Outdoor Equipment (OE) sells camping equipment. On December 1, the accounts receivable account had a balance of $51,000, the bad debt expense account had a balance of $0, and the allowance for doubtful account had a credit balance of $5,100. Journalize the remaining journal entries for the 2017 year.

Dec. 2 Sold tents for $5,200 on account with a cost of $2,600.
      20 Determined that the total accounts of Rocky Co. with an accounts receivable balance of $1,300 and Grouse Co. with an accounts receivable balance of $2,600 were uncollectible and needed to be written off.
      23 Unexpectedly received payment from Grouse Co. for $2,600.
      31 Estimated that 10% of accounts receivable recorded to date would be uncollectible.

Required:
1. Prepare journal entries to record the transactions. Note: Write-off of uncollectible accounts for Rocky Co. and Grouse Co. should be posted separately.

Journal entry worksheet

Record the estimate for uncollectible accounts.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31, 2017 Bad debt expense 520 Allowance for doubtful accounts 520

2. Post the T-account for accounts receivable, bad debt expense, and allowance for doubtful accounts. Determine the ending balance for each account.

	Accounts Receivable Allowance for Doubtful Accounts Beg. Bal. 51,000 Beg. Bal. 5,100 End. Bal. 51,000 End. Bal. 5,100 Bad debt expense Beg. Bal. End. Bal. 0

Answer 1

	Journal entries
Date	Account titles & Explanations				Debit	Credit
2-Dec	Accounts receivable				5,200
	sales					5,200
	Cost of goods sold				2,600
	Merchandise inventory					2,600
20-Dec	Allowance for Doubtful account				3900
	Accounts recievable					3900
23-Dec	Accounts receivable				2,600
	Allowance for Doubtful accounts					2,600
	Cash				2,600
	Accounts receivable					2,600
31-Dec	Bad debts expense				1,430
	Accounts receivable					1,430
	T- Accounts
	Account receivable
	opening	51,000	20-Dec	3900
	2-Dec	5,200	23-Dec	2,600
	23-Dec	2,600
	end bal	52,300
	Allowance for Doubtful accounts
	20-Dec	3900	opening	5,100
			23-Dec	2,600
			bad debts	1,430
			end bal	5,230
	Estimated bad debts = 52,300*10%=				5,230