Westport Co. is a merchandising company that started its business on July 1, 2020. Transactions for July 2020: 1. Cash sales of $300,000, cost of sold merchandise $150,000; 2. Credit sales of $220,000, cost of sold merchandise $100,000; 3. Collected $90,000 of accounts receivable; 4. The aging schedule of the balance of accounts receivable as of July 31 is as follows: % not to be collected 4% 6% Grl Gr2 3. Not yet due 1 month past due Transactions for August 2020: 1. Cash sales of $350,000, cost of sold merchandise $160,000; 2. Grl Gr2 Gr3 Credit sales of $200,000, cost of sold merchandise $90,000; On August 5 Westport learned that one of the customers, XYZ Co. is bankrupt and will not pay $2,000 of accounts receivable; 4. Collected $150,000 of accounts receivable; 5. On August 25, XYZ Co. informed that their financial position improved and paid $2,000 of their debt; 6. The aging schedule of the balance of accounts receivable as of August 31 is as follows: % not to be collected $22,000 $8,000 Not yet due 1 month past due 2 month past due $29,000 $15,000 $4,000 6% 10% Required: Prepare journal entries as of July 31 and August 31 to recognize Bad Debt Expense using the Balance Sheet approach. Show all supporting calculations!
Westport Co. is a merchandising company that started its business on July 1, 2020. Transactions for July 2020: 1. Cash sales of $300,000, cost of sold merchandise $150,000; 2. Credit sales of $220,000, cost of sold merchandise $100,000; 3. Collected $90,000 of accounts receivable; 4. The aging schedule of the balance of accounts receivable as of July 31 is as follows: % not to be collected 4% 6% Grl Gr2 3. Not yet due 1 month past due Transactions for August 2020: 1. Cash sales of $350,000, cost of sold merchandise $160,000; 2. Grl Gr2 Gr3 Credit sales of $200,000, cost of sold merchandise $90,000; On August 5 Westport learned that one of the customers, XYZ Co. is bankrupt and will not pay $2,000 of accounts receivable; 4. Collected $150,000 of accounts receivable; 5. On August 25, XYZ Co. informed that their financial position improved and paid $2,000 of their debt; 6. The aging schedule of the balance of accounts receivable as of August 31 is as follows: % not to be collected $22,000 $8,000 Not yet due 1 month past due 2 month past due $29,000 $15,000 $4,000 6% 10% Required: Prepare journal entries as of July 31 and August 31 to recognize Bad Debt Expense using the Balance Sheet approach. Show all supporting calculations!
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Westport Co. is a merchandising company that started its business on July 1, 2020.
Transactions for July 2020:
1. Cash sales of $300,000, cost of sold merchandise $150,000;
2. Credit sales of $220,000, cost of sold merchandise $100,000;
3. Collected $90,000 of accounts receivable;
4. The aging schedule of the balance of accounts receivable as of July 31 is as follows:
% not to be collected
4%
6%
Grl
Gr2
3.
Not yet due
1 month past due
Transactions for August 2020:
1. Cash sales of $350,000, cost of sold merchandise $160,000;
2.
Grl
Gr2
Gr3
Credit sales of $200,000, cost of sold merchandise $90,000;
On August 5 Westport learned that one of the customers, XYZ Co. is bankrupt and will not pay $2,000 of accounts
receivable;
4. Collected $150,000 of accounts receivable;
5.
On August 25, XYZ Co. informed that their financial position improved and paid $2,000 of their debt;
6. The aging schedule of the balance of accounts receivable as of August 31 is as follows:
% not to be collected
$22,000
$8,000
Not yet due
1 month past due
2 month past due
$29,000
$15,000
$4,000
6%
10%
Required: Prepare journal entries as of July 31 and August 31 to recognize Bad Debt Expense using the Balance Sheet approach.
Show all supporting calculations!
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