Majestic Equipment Sales Company, which sells only on account, had a $ 137,000 balance in its Accounts Receivable and a $ 5,100 credit balance in its Allowance for Doubtful Accounts on December 31, 2019. During 2020, the company's sales of equipment were $ 833,000 and its total cash collections from customers were $ 789,000. During the year, the company concluded that customers with accounts totalling $ 7,000 would be unable to pay, and wrote these receivables off. However, one of these customers subsequently made a payment of $850. (Note that this amount is not included in the cash collections noted above.) At the end of 2020, management decided that it would use an estimate for bad debts of 1% of its credit sales.

Prepare the journal entries to record all the 2020 transactions, including the adjustment for bad debts expense at year end. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
Enter an account title to record sales.	Enter a debit amount.	Enter a credit amount.
Enter an account title to record sales.	Enter a debit amount.	Enter a credit amount.
(To record sales)
Enter an account title to record cash collected from customers.	Enter a debit amount.	Enter a credit amount.
Enter an account title to record cash collected from customers.	Enter a debit amount.	Enter a credit amount.
(To record cash collected from customers)
Enter an account title to write off accounts receivable.	Enter a debit amount.	Enter a credit amount.
Enter an account title to write off accounts receivable.	Enter a debit amount.	Enter a credit amount.
(To write off accounts receivable)
Enter an account title to reinstate an account that were previously written off.	Enter a debit amount.	Enter a credit amount.
Enter an account title to reinstate an account that were previously written off.	Enter a debit amount.	Enter a credit amount.
(To reinstate an account that were previously written off)
Enter an account title to record recovery of account that were previously written off.	Enter a debit amount.	Enter a credit amount.
Enter an account title to record recovery of account that were previously written off.	Enter a debit amount.	Enter a credit amount.
(To record recovery of account that were previously written off)
Enter an account title to recognize the bad debts expense.	Enter a debit amount.	Enter a credit amount.
Enter an account title to recognize the bad debts expense.	Enter a debit amount.	Enter a credit amount.
(To recognize the bad debts expense)

eTextbook and Media

List of Accounts

Question Part Score

--/80

Show how the accounts receivable section of the statement of financial position at December 31, 2020, would be presented.

Majestic Equipment Sales Company Statements of Financial Position (Partial) Choose the accounting period. As at December 31, 2020For the Month Ended December 31, 2020For the Year Ended December 31, 2020
Enter a balance sheet item.		$ Enter a dollar amount.
Select between addition and deduction. LessAdd: Enter a balance sheet item.		Enter a dollar amount.
Accounts receivable, net		$ Enter a total amount.

eTextbook and Media

List of Accounts

Question Part Score

--/15

What amount of bad debts expense would appear in the statement of income for the year ended December 31, 2020?

Bad debts expense for year

$ Enter bad debts expense for year in dollars.

eTextbook and Media

List of Accounts