Question

The balance sheet of Cullumber Company at December 31, 2019, includes the following.

Answer 1

Answer:

Cash                    146,936 debit

Sales discount        2,546 debit

Accounts Receivables                149,500 credit

--to record the collection of A/R--

Accounts Receivables        5,590 debit

Allowance for doubtful accounts 5,590 credit

Cash                                    5,590 debit

A/R                                                 5,590 credit

--to record recovery of write-off accounts--

Allowance for doubtful accounts 24,000 debit

              Accounts Receivables                      24,000 credit

--to record write-off accounts--

bad debt expense       22,210 debit

   Allowance for doubtful accounts    22,210 credit

--to record year-end adjustment for bad debt expense--

Explanation:

1) sales discount: 64,100 x 4% = 2,564

  cash proceeds: 149,500 - 2,564 = 146,936

2) we should reverse the write-off entry and reocrd the collection

3) we decrease both, the allowance and A/R by the uncollectible amount

4) we should adjust the allowance to match the estimated balance:

currnet balance:

DEBIT     CREDIT

                23,800

24,000

                  5,590

                  5,390

adj                     ?

ending B 27,600

adjusmtent: 27,600 - 5,390 = 22,210