Question

At the beginning of the current period, Novak Corp. had balances in Accounts Receivable of $213,500 and in Allowance for Doubtful Accounts of $8,500 (credit). During the period, it had net credit sales of $878,100 and collections of $704,650. It wrote off as uncollectible accounts receivable of $7,543. However, a $3,093 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $24,950 at the end of the period. (Omit cost of goods sold entries.) (a) Prepare the entries to record sales and collections during the period. (b) Prepare the entry to record the write-off of uncollectible accounts during the period. (c) Prepare the entries to record the recovery of the uncollectible account during the period. (d) Prepare the entry to record bad debt expense for the period. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (To record sales) (b) (c) (To reinstate account previously written off) (d)

Answer 1

Answer:

Journal entries

Explanation:

The journal entries are shown below:

a. Account receivable $7878,100

               To sales revenue $878,100

(Being the sales is recorded)

Cash Dr $704,650

         To Account receivable $704,650

(Being the collection is recorded)

b. Allowance for doubtful debts $7,543

            To Account receivable $7,543

(Being the written off amount is recorded)

c. Account receivable $3,093

            To  Allowance for doubtful debts $3,093

(Being the previously written off as uncollectible is recorded)

Cash Dr $3,093

        To Account receivable $3,093

(Being the recovery is recorded)

d. Bad debt expense $20,900

         To Allowance for doubtful debts $20,900

(Being the bad debt expense is recorded)

The computation of the bad debt expense is shown below:

= Opening balance of Allowance for Doubtful Accounts - written off amount + recovery amount - uncollectible amount

= $8,500 - $7,543 + $3,093 - $24,950

= $20,900