Prepare general journal entries to record the following transactions for Smith Company. (The company uses the balance sheet approach for recording bad debts expense.) 2021 Dec. 31 Recorded Bad Debts Expense, $900 2022 Jan. 3 Wrote off Jal's account as uncollectible, $260 Mar. 4 Wrote off Hall's account as uncollectible, $95 Jul. 5 Recovered $55 from Hall Aug. 19 Wrote off M. Wilson's account as uncollectible, $50 Nov. 7 Recovered $45 from Jal
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.
B) Prepare general
2021
Dec. 31 Recorded Bad Debts Expense, $900
2022
Jan. 3 Wrote off Jal's account as uncollectible, $260
Mar. 4 Wrote off Hall's account as uncollectible, $95
Jul. 5 Recovered $55 from Hall
Aug. 19 Wrote off M. Wilson's account as uncollectible, $50
Nov. 7 Recovered $45 from Jal
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