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Concept explainers
Accounting for uncollectible accounts using the allowance method (percent-of-sales) and reporting receivables on the
Beta Watches completed the following selected transactions during 2016 and 2017:
2016
Dec. 31 Estimated that
31 Made the closing entry for bad debts expense. 2017
Jan. 17 Sold merchandise inventory to Marty Viller, $900, on account. Ignore Cost of Goods Sold.
Jun. 29 Wrote off Marty Viller's account as uncollectible after repeated efforts to collect from him.
Aug. 6 Received $900 from Marty Viller, along with a letter apologizing for being so late. Reinstated Viller's account in full and recorded the cash receipt.
Dec. 31 Made a compound entry to write off the following accounts as uncollectible: Bob Keffer, $1,900; Mary Martin, $1,000; and Robert Ronson, $400.
31 Estimated that bad debts expense for the year was 3% on credit sales of $500,000 and recorded the expense.
31 Made the closing entry for bad debts expense.
Requirements
1. Open T-accounts for Allowance for Bad Debts and Bad Debts Expense. Keep running balances, assuming all accounts begin with a zero balance.
2. Record the transactions in the general journal, and post to the two T-accounts.
3. Assume the December 31, 2017, balance of
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Chapter 9 Solutions
Horngren's Accounting, The Financial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (11th Edition)
- General accountingarrow_forwardGeneral accountingarrow_forwardThe following data were selected from the records of Fluwars Company for the year ended December 31, current year: Balances at January 1, current year: Accounts receivable (various customers) $ 111,500 Allowance for doubtful accounts 11,200 The company sold merchandise for cash and on open account with credit terms 1/10, n/30, without a right of return. The following transactions occurred during the current year: Sold merchandise for cash, $252,000. Sold merchandise to Abbey Corp; invoice amount, $36,000. Sold merchandise to Brown Company; invoice amount, $47,600. Abbey paid the invoice in (b) within the discount period. Sold merchandise to Cavendish Inc.; invoice amount, $50,000. Collected $113,100 cash from customers for credit sales made during the year, all within the discount periods. Brown paid its account in full within the discount period. Sold merchandise to Decca Corporation; invoice amount, $42,400. Cavendish paid its account in full after the…arrow_forward
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