On 30th November, account balances relating to the accounts receivable management function of Minnesota’s CitySliers Hotel were as follows:

The following transactions occurred in December:
1. Cash collected from credit sale customers was \($92,000.
2.\) Credit sales were \($101,000.

On\) a monthly basis, the manager of accounts receivable has made an allowance of 1.25 per cent of sales to cover the contingency of trade debts turning bad. At the hotel’s year-end, on 31st December, a review of accounts receivable has revealed the following:

the company accountant has decided that all accounts with an age of 180 days or more should be wrien off from the accounts receivable ledger. In addition, the doubtful accounts balance should be revised to reflect the remaining estimated doubtful accounts following the year-end review of the accounts receivable ledger.

Required:

(a) Record December’s credit sales and cash collected transactions in appropriately titled “T-accounts”.

(b) Record all necessary year-end adjusting entries in appropriately titled “T-accounts”.

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Accounts receivable $141,500 Debit balance Allowance for doubtful accounts $2,400 Credit balance Revenue $1,320,000 Credit balance Bad debts expense $12,400 Debit balance