Entries for uncollectible receivables, using allowance method InstructionsChart of AccountsJournal Instructions May1.Sold merchandise on account to Taiwan Palace Co., $36,000. The cost of the merchandise sold was $23,540.Aug.30.Received $10,380 from Taiwan Palace Co. and wrote off the remainder owed on the sale of May 1 as uncollectible.Dec.8.Reinstated the account of Taiwan Palace Co. that had been written off on August 30 and received $25,620 cash in full payment. Required: Journalize the above transactions in the accounts of Arizona Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Chart of Accounts CHART OF ACCOUNTSArizona Interiors CompanyGeneral Ledger ASSETS110Cash111Petty Cash121Accounts Receivable-Taiwan Palace Co.129Allowance for Doubtful Accounts131Interest Receivable132Notes Receivable141Merchandise Inventory145Office Supplies146Store Supplies151Prepaid Insurance181Land191Store Equipment192Accumulated Depreciation-Store Equipment193Office Equipment194Accumulated Depreciation-Office Equipment LIABILITIES210Accounts Payable211Salaries Payable213Sales Tax Payable214Interest Payable215Notes Payable EQUITY310Owner, Capital311Owner, Drawing312Income Summary REVENUE410Sales610Interest Revenue EXPENSES510Cost of Merchandise Sold520Sales Salaries Expense521Advertising Expense522Depreciation Expense-Store Equipment523Delivery Expense524Repairs Expense529Selling Expenses530Office Salaries Expense531Rent Expense532Depreciation Expense-Office Equipment533Insurance Expense534Office Supplies Expense535Store Supplies Expense536Credit Card Expense537Cash Short and Over538Bad Debt Expense539Miscellaneous Expense710Interest Expense Journal Journalize the transactions in the accounts of Arizona Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Answered: Entries for uncollectible receivables,…

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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Question

Entries for uncollectible receivables, using allowance method

Instructions

Chart of Accounts

Journal

Instructions

May	1.	Sold merchandise on account to Taiwan Palace Co., $36,000. The cost of the merchandise sold was $23,540.
Aug.	30.	Received $10,380 from Taiwan Palace Co. and wrote off the remainder owed on the sale of May 1 as uncollectible.
Dec.	8.	Reinstated the account of Taiwan Palace Co. that had been written off on August 30 and received $25,620 cash in full payment.

Required:

Journalize the above transactions in the accounts of Arizona Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Chart of Accounts

CHART OF ACCOUNTS

Arizona Interiors Company

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable-Taiwan Palace Co.
129	Allowance for Doubtful Accounts
131	Interest Receivable
132	Notes Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Sales Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Store Equipment
523	Delivery Expense
524	Repairs Expense
529	Selling Expenses
530	Office Salaries Expense
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Office Supplies Expense
535	Store Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

Journal

Journalize the transactions in the accounts of Arizona Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Expert Solution

Step 1

Allowance method of accounting for uncollectible receivables:

An allowance for doubtful account is reserve account, a contra asset account for account receivable which is used to record estimated bad debt expense based on past trend. Whenever account receivable is to be written off, then allowance for doubtful account is used.

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