Answer:
Shamrock Corp.
Entry to write off the uncollectible balance of Warren Harding Co.:
Debit Allowance for Uncollectible accounts $13,500
Credit Accounts Receivable $13,500
To write off the uncollectible account.
Explanation:
a) Data and Calculations:
Credit terms = 2/10, net 60. This means that 2% discount is allowed to each customer for making payment within 10 days and the longest credit is 60 days.
Sales to Warren Harding Co = $15,000
Amount debited to Accounts Receivable = 14,700 ($15,000 * 98%)
Amount paid by Warren (10%) = $1,500
Amount to be written off as uncollectible = $13,500
Discount of $300 will be reversed with a debit to the Accounts Receivable and a credit to Discount Allowed (since the Shamrock Corp. records its sales and receivables net.)
Cash of $1,500 will be debited and Accounts Receivable credited to record the 10% of $15,000 cash receipt from Warren Harding Co. The remaining amount, which is $13,500 will be written off with a debit to Allowance for Uncollectible accounts and a credit to Accounts Receivable.
