Prepare the above general journal entries:
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.
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Wilcox Mills is a manufacturer that makes all sales on 30-day credit terms. Annual sales are approximately $30 million. At the end of 2012, |
| Accounts receivable from clients | $ | 3,100,000 | ||
| Less: Allowance for Impairment | 80,000 | |||
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During 2013, $190,000 of specific accounts receivable were written off as uncollectible. Of these accounts written off, receivables totaling $16,000 were subsequently collected. At the end of 2013, an aging of accounts receivable indicated a need for a $254,000 allowance to cover possible failure to collect the accounts currently outstanding. |
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| Wilcox Mills makes |
| 1. | One entry to summarize all accounts written off against the Allowance for Impairment during 2013. | |
| 2. | Entries to record the $16,000 in accounts receivable that were subsequently collected. | |
| 3. | The adjusting entry required at December 31, 2013, to increase the Allowance for Impairment to $254,000. |
| a. | Prepare the above general |
| Date | General Journal | Debit | Credit |
| 2013 | |||
| Var.* | (Click to select)Accounts payableUncollectible accounts expenseAllowance for ImpairmentInterest receivableAccounts receivableNotes receivableOffice equipmentCash | ||
| (Click to select)Interest receivableAccounts payableUncollectible accounts expenseAccounts receivableOffice equipmentNotes receivableAllowance for ImpairmentCash | |||
| Var.* | (Click to select)Notes receivableOffice equipmentCashAccounts payableInterest revenueAllowance for ImpairmentUncollectible accounts expenseAccounts receivable | ||
| (Click to select)CashBank service chargeOffice equipmentAllowance for ImpairmentInterest revenueNotes receivableUncollectible accounts expenseAccounts receivable | |||
| Var.* | (Click to select)Accounts receivableInterest revenueNotes receivableInterest receivableCashAllowance for ImpairmentUncollectible accounts expenseOffice equipment | ||
| (Click to select)Interest receivableAllowance for ImpairmentAccounts receivableInterest revenueNotes receivableUncollectible accounts expenseOffice equipmentCash | |||
| Dec 31 | (Click to select)Accounts payableBank service chargeCashAllowance for ImpairmentInterest receivableUncollectible accounts expenseNotes receivableAccounts receivable | ||
| (Click to select)CashAccounts receivableInterest revenueAccounts payableNotes receivableAllowance for ImpairmentInterest receivableUncollectible accounts expense | |||
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