At December 31, 2014, the general ledger and subsidiary ledger for Albert's, a small auto parts store, showed the following:

Jan. 3 Brown's Repair paid $18,000 on its account.
4 Custom Repair paid $1,400 on its account that had previously been written off .
8 Jen's Auto Body purchased $3,800 of merchandise on account.
9 Antique Auto Repair paid cash for $1,500 of merchandise.
18 Jen's Auto Body returned $800 of merchandise.
19 Luxury Autos paid $13,200 on its account.
20 Jen's Auto Body paid $25,000 on its account.
23 Brown's Repair purchased $5,600 on account.
25 Custom Repair purchased $10,000 of merchandise on Visa.
26 Luxury Autos purchased $18,000 of merchandise on account.
31 Albert's determined that the Best Auto Repair account receivable was not collectible.
Instructions
(a) Record the above transactions. Ignore credit card fees and any entries to inventory or cost of goods sold for purposes of this question.
(b) Set up T accounts for the Accounts Receivable general ledger (control) account, the Allowance for Doubtful Accounts general ledger account, and the Accounts Receivable subsidiary ledger accounts. Post the journal entries to these accounts.
(c) Albert's estimated that 10% of accounts receivable is not collectible. Record the required adjustment to the allowance for doubtful accounts.
(d) Prepare a list of customers and the balances of their accounts from the subsidiary ledger. Prove that the total of the subsidiary ledger is equal to the control account balance.

Transcribed Image Text:

Accounts Receivable Subsidiary Ledger General Ledger Accounts receivable Allowance for doubtful accounts $75,000 t Auto Repair 3,750 Brown's Repair $ 3,800 23,000 Custom Repair Jen's Auto Body Luxury Autos Total 35,000 13,200 $75,000