December 20-1, TJ’s Specialty Shop engaged in the following transactions: Dec. 16 Received payment from Lucy Greene on account, $1,960. 16 Sold merchandise on account to Kim Fields, $160, plus sales tax of $8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, $150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of $1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, $620, plus tax of $31. Sale No. 641. 22 Received payment from John Dempsey on account, $1,560. 23 Issued Check No. 814 for the purchase of supplies, $120. (Debit Supplies) 24 Purchased merchandise on account from West Whole
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
During the second half of December 20-1, TJ’s Specialty Shop engaged in the following
transactions:
Dec. 16 Received payment from Lucy Greene on account, $1,960.
16 Sold merchandise on account to Kim Fields, $160, plus sales tax of $8.
Sale No. 640.
17 Returned merchandise to Evans Essentials for credit, $150.
18 Issued Check No. 813 to Evans Essentials in payment of December 1
balance of $1,250, less the credit received on December 17.
19 Sold merchandise on account to Lucy Greene, $620, plus tax of $31.
Sale No. 641.
22 Received payment from John Dempsey on account, $1,560.
23 Issued Check No. 814 for the purchase of supplies, $120. (Debit Supplies)
24 Purchased merchandise on account from West Wholesalers, $1,200.
Invoice No. 465, dated December 24, terms n/30.
26 Purchased merchandise on account from Nathen Co., $800.
Invoice No. 817, dated December 26, terms 2/10, n/30.
27 Issued Check No. 815 to KC Power & Light (Utilities Expense) for the
month of December, $630.
27 Sold merchandise on account to John Dempsey, $2,020, plus tax of
$101. Sale No. 642.
29 Received payment from Martha Boyle on account, $2,473.
29 Issued Check No. 816 in payment of wages (Wages Expense) for the
two-week period ending December 28, $1,100.
30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of
merchandise, $200.
As of December 16, TJ’s account balances were as follows:
(a, b) Merchandise inventory as of December 31,
$19,700.
(c, d, e) Jones estimates that customers will be
granted $400 in refunds of this year’s sales
next year, and the merchandise expected to
be returned will have a cost of $300.
(f) Unused supplies on hand, $525.
(g) Unexpired insurance on December 31, $1,000.
(h)
year, $800.
(i) Depreciation expense on the store equipment
for the year, $450.
(j) Wages earned but not paid as of December 31,
$330.
Required
For those not using working papers:
1. If you are not using the working papers, open a general ledger, an accounts
receivable ledger, and an accounts payable ledger as of December 16. Enter the
December 16 balance of each of the accounts, with a check mark in the Posting
Reference column.
For working paper users and nonusers:
2. Enter transactions for the second half of December in the general journal. Post
immediately to the accounts receivable and accounts payable ledgers.
3. Post from the journal to the general ledger.
4. Prepare schedules of accounts receivable and accounts payable.
5. Prepare a year-end spreadsheet, an income statement, a statement of owner’s
equity, and a balance sheet. The mortgage payable includes $600 that is due
within one year.
6. Journalize and post
7. Journalize and
account balances. Then, close Income Summary and Tom Jones, Drawing to
Tom Jones, Capital.)
8. Prepare a post-closing
9. Journalize and post reversing entries for the adjustments where appropriate, as
of January 1, 20-2.
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