Question

The following events occur for The Underwood Corporation during 2021 and 2022, its first two years of operations. June 12, 2021 Provide services to customers on account for $33,200. September 17, 2021 Receive $18,500 from customers on account. December 31, 2021 Estimate that 45% of accounts receivable at the end of the year will not be received. March 4, 2022 Provide services to customers on account for $48,200. Record transactions for each date

Answer 1

Answer:

The Underwood Corporation

Journal Entries for 2021 and 2022:

June 12, 2021:

Debit Accounts Receivable $33,200

Credit Service Revenue $33,200

To record the provision of services to customers on account.

September 17, 2021:

Debit Cash Account $18,500

Credit Accounts Receivable $18,500

To record the receipt of cash on account.

December 31, 2021:

Debit Uncollectible Expense $6,615

Credit Allowance for Doubtful Debts $6,615

To record 45% of accounts receivable estimated as uncollectible.

March 4, 2022:

Debit Accounts Receivable $48,200

Credit Service Revenue $48,200

To record the provision of services to customers on account.

Explanation:

a) Data and Calculations:

Accounts Receivable balance = $14,700 ($33,200 - $18,500)

45% of balance estimated as uncollectible = $6,615 (14,700 * 45%)

b) The Underwood Corporation uses the general journal to record transactions that occur on a daily basis.  The journal identifies the accounts for each transaction and the ones to be debited and credited respectively.

Answer 2

Answer:

$48,200

Explanation: