Required A + B and all individual parts of Journal **Educational Text:**### Topic: Accounting for Bad DebtsIn this exercise, we will prepare journal entries under two methods: (a) the direct write-off method and (b) the allowance method, to account for uncollectible accounts.**Scenario:**- On May 3, Sal Company identified that it cannot collect an accounts receivable of $2,000 from Joey Company.- On May 21, Sal Company unexpectedly receives a payment of $2,000 in cash from Joey Company for this previously written-off account, allowing Sal Company to record a recovery of the bad debt.**Instructions:**Complete the accounting exercise by entering your answers in the tabs provided. Focus on the direct write-off method first.**Journal Entry Worksheet:**- **Transaction 1**: Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company. - **Date**: May 03 - **General Journal Entry**: - **Debit**: Bad Debt Expense for $2,000 - **Credit**: Accounts Receivable for $2,000 *(Note: Enter debits before credits)*The worksheet provides a structured table to record the journal entries, highlighting the importance of chronological entry and accuracy for financial clarity. Once the entries are recorded, you can view them in the general journal for review.By understanding and applying these methods, businesses can accurately manage their financial records, ensuring that accounts reflect true economic activities. **Journal Entries for Bad Debt under Direct Write-off and Allowance Methods**In this section, we discuss how to prepare journal entries to manage bad debts using both the direct write-off method and the allowance method.**Scenario Description:**- **May 3**: Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company.- **May 21**: Sal Company unexpectedly receives a payment of $2,000 from Joey Company toward its previously written-off account. Sal records the recovery of this bad debt.**Instructions:**Complete this task by entering your answers in the tabs below labeled Required A and Required B.**Requirement:**- Prepare journal entries to record the allowance method.**Journal Entry Worksheet:**- **Transaction on May 3**: Sal Company determines it cannot collect its accounts receivable of $2,000 from Joey Company. (Note: Enter debits before credits)**Entry Procedure:**- **Date: May 03** | General Journal | Debit | Credit | |-----------------|-------|--------| | | | | | | | | | | | |_(Table for entries to be filled as per the chosen accounting method.)_**Options:**- Click "Record entry" to save your journal entry.- Click "Clear entry" to reset the current entry form.- Click "View general journal" to review the entered records.Ensure you maintain accurate records and understand both methods for effective financial management.

JOURNAL ENTRIES Journal entries is the process of recording all Financial & Non Financial Transaction in a Proper Format. Journal Entries is the First stage of System of Accounting. Golden Rule of Journal Entry :— Debit the receiver, Credit the Giver. Debit what comes in, Credit what Goes out. Debit all expenses & Loss, Credit all Income & Gain Requirement #1 :— Statement Showing Journal Entry by using Direct Write-off Method. Date Account title and explanation Debit Credit #A Bad debt expense $ 2,000 Accounts receivable $ 2,000 (To record written off of uncollectibles) #B Accounts receivable $ 2,000 Bad debt expense $ 2,000 (To reinstate previously written off) #C Cash $ 2,000 Accounts receivable $ 2,000 (To record payment received on account) Requirement #2 :— Statement Showing Journal Entry by using Allowance Method. Date Account title and explanation Debit Credit #A Allowance for doubtful accounts $ 2,000 Accounts receivable $ 2,000 (To record written off of uncollectibles) #B Accounts receivable $ 2,000 Allowance for doubtful accounts $ 2,000 (To reinstate previously written off) #C Cash $ 2,000 Accounts receivable $ 2,000 (To record payment received on account)

Business

Accounting

Prepare journal entries to record the following under (a) the direct write-off method and (b) the allowance method. May 3 Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company. May 21 Sal Company unexpectedly receives payment of $2,000 cash from Joey Company toward its previously written-off account. Sal records recovery of this bad debt. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries to record the direct write-off method. View transaction list Journal entry worksheet < 1 2 Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company. Date May 03 3 Note: Enter debits before credits. Record entry General Journal Clear entry Debit Credit View general journal >

Prepare journal entries to record the following under (a) the direct write-off method and (b) the allowance method. May 3 Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company. May 21 Sal Company unexpectedly receives payment of $2,000 cash from Joey Company toward its previously written-off account. Sal records recovery of this bad debt. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries to record the direct write-off method. View transaction list Journal entry worksheet < 1 2 Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company. Date May 03 3 Note: Enter debits before credits. Record entry General Journal Clear entry Debit Credit View general journal >

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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Concept explainers

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.

Question

Required A + B and all individual parts of Journal

**Educational Text:**

### Topic: Accounting for Bad Debts

In this exercise, we will prepare journal entries under two methods: (a) the direct write-off method and (b) the allowance method, to account for uncollectible accounts.

**Scenario:**

- On May 3, Sal Company identified that it cannot collect an accounts receivable of $2,000 from Joey Company.
- On May 21, Sal Company unexpectedly receives a payment of $2,000 in cash from Joey Company for this previously written-off account, allowing Sal Company to record a recovery of the bad debt.

**Instructions:**

Complete the accounting exercise by entering your answers in the tabs provided. Focus on the direct write-off method first.

**Journal Entry Worksheet:**

- **Transaction 1**: Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company.

- **Date**: May 03

- **General Journal Entry**:

- **Debit**: Bad Debt Expense for $2,000
- **Credit**: Accounts Receivable for $2,000

*(Note: Enter debits before credits)*

The worksheet provides a structured table to record the journal entries, highlighting the importance of chronological entry and accuracy for financial clarity. Once the entries are recorded, you can view them in the general journal for review.

By understanding and applying these methods, businesses can accurately manage their financial records, ensuring that accounts reflect true economic activities.

**Journal Entries for Bad Debt under Direct Write-off and Allowance Methods**

In this section, we discuss how to prepare journal entries to manage bad debts using both the direct write-off method and the allowance method.

**Scenario Description:**

- **May 3**: Sal Company determines that it cannot collect its accounts receivable of $2,000 from Joey Company.
- **May 21**: Sal Company unexpectedly receives a payment of $2,000 from Joey Company toward its previously written-off account. Sal records the recovery of this bad debt.

**Instructions:**

Complete this task by entering your answers in the tabs below labeled Required A and Required B.

**Requirement:**

- Prepare journal entries to record the allowance method.

**Journal Entry Worksheet:**

- **Transaction on May 3**:
Sal Company determines it cannot collect its accounts receivable of $2,000 from Joey Company.

(Note: Enter debits before credits)

**Entry Procedure:**

- **Date: May 03**

| General Journal | Debit | Credit |
|-----------------|-------|--------|
| | | |
| | | |
| | | |

_(Table for entries to be filled as per the chosen accounting method.)_

**Options:**
- Click "Record entry" to save your journal entry.
- Click "Clear entry" to reset the current entry form.
- Click "View general journal" to review the entered records.

Ensure you maintain accurate records and understand both methods for effective financial management.

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