Journal Entries for Credit Losses

At the beginning of the year, Portal Company had the following accounts on its books:

Accounts Receivable $$140,000$ Debit

Allowance for Doubtful Accounts $$8,000$ Credit

During the year, credit sales were: $$1,173,000$

and collections on account were: $$1,175,000$

The following transactions, among others, occurred during the year:

Feb$\mathrm{.}17$ Wrote off R$.$ Lowell$$s account, $$4,000$

May$\mathrm{.}28$ Wrote off G$.$ Boyd$$s account, $$3,400$

Oct$\mathrm{.}13$ Received $$600$ from G$.$ Boyd, who is in bankruptcy proceedings,

in final settlement of the account written off on May $28.$

This amount is not included in the $$1,175,000$ collections.

Dec$\mathrm{.}15$ Wrote off K$.$ Marshall$$s account. $$1,600$

Dec$\mathrm{.}31$ In an adjusting entry, recorded the allowance for doubtful accounts at $0\mathrm{.}9\%$

of credit sales for the year.

a$.$ Prepare journal entries to record the credit sales, the collections on account, and the preceding transactions and adjustment.

b$.$ Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December $31$ balance sheet.

a$.$

General Journal

Date Description Debit Credit

Dec$\mathrm{.}31$ Answer

Accounts Receivable

Answer

$1,173,000$

Answer

$0$

Answer

Sales Revenue

Answer

$0$

Answer

$1,173,000$

To record sales revenue for the year.

Dec$\mathrm{.}31$ Answer

Cash

Answer

$1,175,000$

Answer

$0$

Answer

Accounts Receivable

Answer

$0$

Answer

$1,175,000$

To record collections on account for the year.

Feb$\mathrm{.}17$ Answer

Allowance for Doubtful Accounts

Answer

$4,000$

Answer

$0$

Answer

Accounts Receivable $-$ R$.$ Lowell

Answer

$0$

Answer

$4,000$

To write off R$.$ Lowell's account.

May$\mathrm{.}28$ Answer

Allowance for Doubtful Accounts

Answer

$3,400$

Answer

$0$

Answer

Accounts Receivable $-$ G$.$ Boyd

Answer

$0$

Answer

$3,400$

To write off G$.$ Boyd's account.

Oct$\mathrm{.}13$ Answer

Accounts Receivable $-$ G$.$ Boyd

Answer

$600$

Answer

$0$

Answer

Allowance for Doubtful Accounts

Answer

$0$

Answer

$600$

To reinstate G$.$ Boyd's account for partial recovery.

Oct$\mathrm{.}13$ Answer

Cash

Answer

$600$

Answer

$0$

Answer

Accounts Receivable $-$ G$.$ Boyd

Answer

$0$

Answer

$600$

To record collection from G$.$ Boyd.

Dec$\mathrm{.}15$ Answer

Allowance for Doubtful Accounts

Answer

$1,600$

Answer

$0$

Answer

Accounts Receivable $-$ K$.$ Marshall

Answer

$0$

Answer

$1,600$

To write$-$off K$.$ Marshall's account.

Dec$\mathrm{.}31$ Answer

Bad Debts Expense

Answer

$4,000$

Answer

$0$

Answer

Allowance for Doubtful Accounts

Answer

$0$

Answer

$4,000$

To record allowance for doubtful accounts.

b$.$

Answer

Accounts Receivable

Answer

$0$

Answer

Less: Allowance for Doubtful Accounts

Answer

$6,443$

Answer

$0$