Accounts Receivable Journal Entries

3. On January 1 of the current year, Neptune, Inc. had the following accounts on its books:

Accounts Receivable $240,000 (debit)

Allowance for Doubtful Accounts $8,000 (credit)

During this year, credit sales were $1,200,000 and collections on account were $1,160,000.

Required:

a. Prepare general journal entries for the following transactions that occurred during the year:

(1) Wrote off N. Purcells account, $6,800.

(2) Wrote off J. Steins account, $2,400.

(3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction

(2). This amount is not included in the $1,160,000 collections.

(4) On December 31, estimated the years bad debts expense at 1% of credit sales.

b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the year-end balance sheet.