Question

Journalize the following transactions in the accounts of Zippy Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables:
May 24 Sold merchandise on account to Old Town Cafe, $19,400. The cost of goods sold was $14,000.
Sept. 30 Received $4,100 from Old Town Cafe and wrote off the remainder owed on the sale of May 24 as uncollectible.
Dec. 7 Reinstated the account of Old Town Cafe that had been written off on September 30 and received $15,300 cash in full payment.

Answer 1

Answer:

Zippy Interiors Company

Journal Entries:

May 24 Debit Accounts receivable (Old Town Cafe) $19,400

Credit Sales revenue $19,400

To record the sale of goods on account.

Debit Cost of goods sold $14,000

Credit Inventory $14,000

To record the cost of goods sold.

Sept. 30 Debit Cash $4,100

Debit Allowance for Uncollectible Accounts $15,300

Credit Accounts receivable (Old Town Cafe) $19,400

To record the receipt of cash and write-off of balance as uncollectible.

Dec. 7 Debit Accounts receivable (Old Town Cafe) $15,300

Credit Allowance for Uncollectible Accounts $15,300

To revise the previously written-off uncollectible account.

Debit Cash $15,300

Credit Accounts receivable (Old Town Cafe) $15,300

To record the receipt of cash in full settlement of account.

Explanation:

a) Data and Calculations:

May 24 Accounts receivable (Old Town Cafe) $19,400 Sales revenue $19,400  Cost of goods sold $14,000 Inventory $14,000

Sept. 30 Cash $4,100 Allowance for Uncollectible Accounts $15,300 Accounts receivable (Old Town Cafe) $19,400

Dec. 7 Accounts receivable (Old Town Cafe) $15,300 Allowance for Uncollectible Accounts $15,300

Cash $15,300 Accounts receivable (Old Town Cafe) $15,300