Blunt Company makes credit sales of $25,000 during the month of February 2019. During 2019, collections are received on February sales of $24,500, accounts representing $500 of these sales are written off as uncollectible, and a $100 account previously written off is collected. Required:1.Prepare the journal entries necessary to record the preceding information if (a) bad debts are estimated as 3% of credit sales at the time of sale and (b) the bad debts are recorded as they actually occur.2.Next Level Which method—recording bad debts at the time of sale or when they actually occur—is preferred? Why?CHART OF ACCOUNTSBlunt CompanyGeneral Ledger ASSETS111Cash121Accounts Receivable122Allowance for Doubtful Accounts141Inventory152Prepaid Insurance181Equipment198Accumulated Depreciation LIABILITIES211Accounts Payable231Salaries Payable250Unearned Revenue261Income Taxes Payable EQUITY311Common Stock331Retained Earnings REVENUE411Sales Revenue EXPENSES500Cost of Goods Sold511Insurance Expense512Utilities Expense521Salaries Expense532Bad Debt Expense540Interest Expense541Depreciation Expense559Miscellaneous Expenses910Income Tax Expense 1a. Assume that bad debts are estimated as 3% of credit sales at the time of sale. Prepare the journal entries to record the credit sales for February and the related estimate of uncollectible accounts on February 28. Next, record the collections on account, the amountthat was written off, and the collection of the account that had been previously written off.General Journal InstructionsAll transactions on this page must be entered (except for post ref(s)) before you will receive CheckMy Work feedback.PAGE 1GENERAL JOURNALScore: 36/151DATEACCOUNT TITLEPOST. REF.DEBITCREDIT1458101112 16. Assume that the bad debts are recorded as they actually occur. Prepare the journal entry on February 28 to record the credit sales for February. Next, record the collections on account, the amount that was written off, and the collection of the account that had beenpreviously written off.General Journal InstructionsQuestion not attempted.PAGE 1GENERAL JOURNALScore: 0/126DATEACCOUNT TITLEPOST. REF.DEBITCREDIT1257910

Journal is the book of original entry in which all the transactions relating to the business are…

Answered: Blunt Company makes credit sales of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Blunt Company makes credit sales of $25,000 during the month of February 2019. During 2019, collections are received on February sales of $24,500, accounts representing $500 of these sales are written off as uncollectible, and a $100 account previously written off is collected.

	Required:
1.	Prepare the journal entries necessary to record the preceding information if (a) bad debts are estimated as 3% of credit sales at the time of sale and (b) the bad debts are recorded as they actually occur.
2.	Next Level Which method—recording bad debts at the time of sale or when they actually occur—is preferred? Why?

CHART OF ACCOUNTS

Blunt Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
122	Allowance for Doubtful Accounts
141	Inventory
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

1a. Assume that bad debts are estimated as 3% of credit sales at the time of sale. Prepare the journal entries to record the credit sales for February and the related estimate of uncollectible accounts on February 28. Next, record the collections on account, the amount
that was written off, and the collection of the account that had been previously written off.
General Journal Instructions
All transactions on this page must be entered (except for post ref(s)) before you will receive Check
My Work feedback.
PAGE 1
GENERAL JOURNAL
Score: 36/151
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
4
5
8
10
11
12

16. Assume that the bad debts are recorded as they actually occur. Prepare the journal entry on February 28 to record the credit sales for February. Next, record the collections on account, the amount that was written off, and the collection of the account that had been
previously written off.
General Journal Instructions
Question not attempted.
PAGE 1
GENERAL JOURNAL
Score: 0/126
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
2
5
7
9
10

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