Question
. At December 31, 2018, Garvey Company reported this information on its balance sheet. Accounts Receivable $ 960,000 Less: Allowance for Doubtful Accounts 78,000 During
. At December 31, 2018, Garvey Company reported this information on its balance sheet.
Accounts Receivable $ 960,000
Less: Allowance for Doubtful Accounts 78,000
During 2019, the company had the following transactions related to receivables.
1. Sales on account $3,600,000
2. Sales returns and allowances 50,000
3. Collection of account receivables 3,100,000
4. Write-offs of account receivable deemed uncollectible 92,000
5. Recovery of bad debts previously written off as uncollectible 28,000
Instructions:
(a) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of account receivables. (Omit cost of goods sold entries)
(b) Enter the January 1, 2019 balance in the Account Receivables and Allowances for Doubtful Accounts, post the journal entries during 2019 to the two accounts (use T accounts), and determine the balances before adjustment.
(c) Prepare the journal entry to record bad debts expense for 2019, assuming that aging the account receivable indicate that expected bad debts are $109,000.
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