Answer:
Liang Company
Journal Entries:
a. Debit Accounts receivable $1,352,600
Credit Sales revenue $1,352,600
To record the sale of goods on credit, terms n/30.
Debit Cost of goods sold $976,400
Credit Inventory $976,400
To record the cost of goods sold.
b. Debit Allowance for Uncollectible Accounts $20,100
Credit Accounts receivable $20,100
To write-off uncollectible accounts.
c. Debit Cash $674,300
Credit Accounts receivable $674,300
To record the receipt of cash on account.
d. Debit Bad Debts Expense $38,530
Credit Allowance for Uncollectible $38,530
To record bad debts expense and bring the ending balance of the Allowance for Uncollectible accounts to a credit balance of $18,430 (2.80% of accounts receivable ($658,200))
Year 2
a. Debit Accounts receivable $1,552,800
Credit Sales revenue $1,552,800
To record the sale of goods on credit, terms n/30.
Debit Cost $1,325,200
Credit Inventory $1,325,200
To record the cost of goods sold on account.
b. Debit Allowance for Uncollectible Accounts $31,300
Credit Accounts receivable $31,300
To write-off uncollectible accounts.
c. Debit Cash $1,282,200
Credit Accounts receivable $1,282,200
To record the receipt of payment on account.
d. Debit Bad Debts Expense $38,000
Credit Allowance for Uncollectible $38,000
To record bad debts expense and bring the ending balance of the Allowance for Uncollectible Accounts to a credit balance of $25,130 (2.80% of accounts receivable ($897,500))
Explanation:
Data and Analysis:
Year 1:
a. Accounts receivable $1,352,600 Sales revenue %1,352,600
on credit, terms n/30.
Cost of goods sold $976,400 Inventory $976,400
b. Allowance for Uncollectible Accounts $20,100 Accounts receivable $20,100
c. Cash $674,300 Accounts receivable $674,300
d. Bad Debts Expense $38,530 Allowance for Uncollectible $38,530 ending balance $18,430 (2.80% of accounts receivable ($658,200))
Year 2
a. Accounts receivable $1,552,800 Sales revenue $1,552,800
on credit, terms n/30.
Cost $1,325,200 Inventory $1,325,200
b. Allowance for Uncollectible Accounts $31,300 Accounts receivable $31,300
c.Cash $1,282,200 Accounts receivable $1,282,200
d. Bad Debts Expense $38,000 Allowance for Uncollectible $38,000
Ending balance $25,130 2.80% of accounts receivable ($897,500)