The December 31, 19X6, balance sheet of Master Auto Glass reports the following:

At the end of each quarter, Master Auto Glass estimates doubtful-account expense to be 2 percent of credit sales. At the end of the year, the company ages its accounts receivable and adjusts the balance in Allowance for Doubtful Accounts to correspond to the aging schedule. During 19X7 Master completes the following selected transactions:

Jan. 31 Wrote off as uncollectible the \(\$ 955\) account receivable from Spinelli Company and the \$3,287 account receivable from Vera Delgado.
Mar. 31 Recorded doubtful-account expense based on credit sales of \(\$ 130,000\).
May 2 Received \(\$ 1,000\) from Delgado after prolonged negotiations with Delgado's attorney. Master has no hope of collecting the remainder.
June 15 Wrote off as uncollectible the \(\$ 1,120\) account receivable from Lisa Brown.
June 30 Recorded doubtful-account expense based on credit sales of \(\$ 166,000\).
July 14 Made a compound entry to write off the following uncollectible accounts: C. H. Harris, \$766; Graphics Unlimited, \$2,413; and Ben McQueen, \$134.
Sep. 30 Recorded doubtful-account expense based on credit sales of \(\$ 141,400\).
Nov. 22 Wrote off the following accounts receivable as uncollectible: Monet Corp., \$1,345; Blocker, Inc., \$2,109; and Main Street Plaza, \(\$ 755\).
Dec. 31 Recorded doubtful-account expense based on the following summary of the aging of accounts receivable:

Dec. 31 Made the closing entry for Doubtful-Account Expense for the entire year.
\section*{Required}
1. Record the transactions in the general journal.
2. Open the Allowance for Doubtful Accounts, and post entries affecting that account. Keep a running balance.
3. Most companies report two-year comparative financial statements. If Master's Accounts Receivable balance is \(\$ 296,600\) at December 31, 19X7, show how the company will report its accounts receivable in a comparative balance sheet for \(19 \mathrm{X} 7\) and \(19 \mathrm{X} 6\).

Transcribed Image Text:

Accounts Receivable....... Allowance for Doubtful Accounts (credit balance.............. $265,000 7,100