1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
m_a_m_a [10]
3 years ago
8

Accounts Receivable As of December 31, 2016, Nala Incorporated reported accounts receivable for $275,000 less allowance for doub

tful accounts of $27,000 on their balance sheet. During 2017, Nala Incorporated had the following transactions related to their receivables balance: 1. Sales on account $180,000 2. Collections of accounts receivable 125,000 3. Sales returns 20,000 4. Write-offs of accounts receivable deemed uncollectible 35,000 5. Recovery of bad debts previously written off 2,500 a) Prepare the journal entries for each of these five transactions b) Prepare the journal entry to record bad debt expense for 2017, assuming that the aging of accounts receivable indicates that estimated bad debts are 10% of accounts receivable.
Business
1 answer:
juin [17]3 years ago
7 0

Answer:

A.

1. Dr Accounts receivable $180,000

Cr Sales $180,000

2. Dr Cash $125,000

Cr Accounts receivable $125,000

3. Dr Sales returns and allowances $20,000

Cr Accounts receivable $20,000

4. Dr Allowance for doubtful accounts $35,000

Cr Accounts receivable $35,000

5. Dr Accounts receivable $2,500

Cr Allowance for doubtful accounts $2,500

Dr Cash $2,500

Cr Accounts receivable $2,500

B. Dr Bad debt expense $27,500

Cr Allowance for doubtful accounts $27,500

Explanation:

A1. To record the sale on account we will debit accounts receivable as our collectible to customer and credit sales in the amount of $180,000

A2. To record the collection, we will recognize the receipt of cash so we have to debit cash and credit accounts receivable to deduct the collectible balance in the amount of $125,000

A3. When the company receives returns from the customers, it will be charged to sales returns and allowances account so we have to debit it and credit accounts receivables in the amount of $20,000 to deduct collectibles to suppliers. Said, sales returns and allowances account is a contra account of sales. Thus, any amount recorded under it will be charged against (deduction) our sales.

A4. During the write off, we will debit allowance for doubtful accounts and credit accounts receivables to reduce its amount from the worthless receivables that is deemed to be uncollectible.

A5. Collection of previously written off receivables will resort to 2 entries. First, reversal of the original entry we made during the write off. So we debit Accounts receivable and credit allowance for doubtful accounts in the amount of $2,500. Next is to record the cash we received from the customer. So debit cash and credit accounts receivable in the same amount of $2,500.

B. To record the bad debt expense, we need to compute first the ending balance of the accounts receivable.

Beg $275,000 plus sales on account of $180,000 less collection $125,000, sales return of $20,000 and write off $35,000 = $275,000.

Bad debts is 10% of the Accounts receivable, so $275,000 x 10% = $27,500

Entry:

Dr bad debt expense $27,500

Cr allowance for doubtful accounts $27,500

You might be interested in
You are an economist studying the small country of Mardodus. As you look at the data, you see Mardodus has experienced an influx
WINSTONCH [101]

Answer: Natural rate of unemployment will decrease because the productivity growth in the short term has passed up wage growth.

Explanation:

The natural unemployment rate simply means the lowest unemployment rate where the inflation in the economy is stable.

Based on the information given in the question, if the natural unemployment rate for this time frame.is analyzed, the natural rate of unemployment will reduce due to the fact that the productivity growth in the short term has passed up wage growth.

3 0
2 years ago
Is the WTO's idea of "fair competition" really a code phrase for free trade?
Semenov [28]

Answer:

Yes, the WTO stands for trade liberalization, which requires transparency, economic reform, and no protectionism, regardless of the member nation's economic situation.

3 0
3 years ago
Assume that the current corporate bond yield curve is upward sloping. Under this condition, then we could be sure that.
frez [133]
One thing for sure is it’s going to slope down soon
5 0
2 years ago
Which factor places this nation in the transitioning<br> category?
lys-0071 [83]

Answer: B. It is shifting from a planned to a free-market economy.

Explanation:

5 0
3 years ago
Joey set up a lawn-mowing business in his neighborhood. He currently has 7 customers that want their lawns mowed each week, for
monitta

Answer:

Joey's weekly revenue is $175.

4 0
3 years ago
Other questions:
  • If a company wanted to quickly identify which employees speak spanish, what would be the best way to do this?
    14·1 answer
  • A prototype includes ________ in a category. an exemplar includes ________ in the category.
    14·1 answer
  • Case ScenarioOver the past four years, the LSS organization, a nonprofit organization headquartered in Minneapolis, MN, has beco
    12·1 answer
  • On June 3, Swifty Company sold to Chester Company merchandise having a sale price of $3,300 with terms of 2/10, n/60, f.o.b. shi
    15·1 answer
  • Which of the following is true about the Institutional Environment?
    13·1 answer
  • Suppose you purchased 500 shares of Jet-Electro Corporation stock at a price of $22.50 per share. One year later, the shares are
    13·1 answer
  • Claremore Company received $7,000 as payment from Tulsa Company for a sale made on account in the previous month. Which of the f
    15·1 answer
  • Identify whether a debit or credit results in the indicated change for each of the following accounts.
    7·1 answer
  • What type of living cost in the u. S. Rose a record 17 percent over the last year, as home prices and construction costs surged
    5·1 answer
  • Which of the following industries faces the strongest threat from new entrants?
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!