Question

Journalize the following transactions in the accounts of Arizona Interiors Company, a Restaurant Supply Company that uses the allowance method of accounting for uncollectible receivables:
May 1. Sold merchandise on account to Taiwan Palace Co., $13,400. The cost of the merchandise sold was $9,600.
Aug. 30. Received $2,800 from Taiwan Palace Co. and wrote off the remainder owed on the sale of May 1 as uncollectible.
Dec. 8. Reinstated the account of Taiwan Palace Co. that had been written off on August 30 and received $10,600 cash in full payment.

Answer 1

Answer:

May 1

Dr Cost of merchandise sold $9,600

Cr Merchandise inventory $9,600

Aug. 30

Dr cash $2,800

Dr Allowance for doubtful accounts $10,600

Cr accounts receivable-peking palace co $13,400

Dec. 8

Dr Accounts receivable - peking palace co $10,600

Cr Allowance for doubtful accounts $10,600

Explanation:

Preparation of the journal entries in the accounts of Arizona Interiors Company

May 1

Dr Cost of merchandise sold $9,600

Cr Merchandise inventory $9,600

Aug. 30

Dr cash $2,800

Dr Allowance for doubtful accounts $10,600

($13,400-$2,800)

Cr accounts receivable-peking palace co $13,400

Dec. 8

Dr Accounts receivable - peking palace co $10,600

Cr Allowance for doubtful accounts $10,600