Seay Company completed the following transactions:
2015 Jan. 9 Sold merchandise on account to Roger's Supply, $1,400.
Jan. 15 Wrote off the account of Pete Reineke as uncollectible because of his death, $600.
Mar. 17 Received $350 from Romero Co., whose account had been written off in 2014. The account was reinstated and the collection recorded.
Apr. 9 Received 20% of the $4,000 owed by Lane DiFelice. The remainder was written off as uncollectible.
June 15 The account for Malcom's Garage was reinstated for $1,300. The account was written off 3 years ago and collected in full today.
Oct. 18 Prepared a compound entry to write the following accounts off as uncollectible: Jen's Diner, $160; Kross Auto, $420; Red's Hardware, $500.
Nov. 12 Sold merchandise on account to J.B. Rug, $2,000.
Dec. 31 Based on an aging of Accounts Receivable, it was estimated that $7,600 will be uncollectible out of a total of $175,000 in Accounts Receivable.
Dec. 31 Closed Bad Debts Expense to Income Summary.
From these transactions as well as the following additional data, complete a-c:
_______________________________________Acct. No. Balance
Allowance for Doubtful Accounts....................114.................$4,200
Income Summary........................................312.....................-
Bad Debts Expense......................................612.....................-
a. Journalize the transactions. The company uses the periodic method.
b. Post to Allowance for Doubtful Accounts, Income Summary, and Bad Debts Expense accounts as needed. (Be sure to record the beginning balance in the Allowance account in the working papers that accompany this text.)
c. Prepare a current assets section of the balance sheet. Ending balances needed are as follows: Cash, $14,500; Accounts Receivable, $175,000; Office Supplies, $2,090; Merchandise Inventory, $107,000; Prepaid Rent, $950.