Problem 7-4A (Algo) Accounts receivable transactions and bad debts adjustments LO C1, P2, P3 Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Year 1 a. Sold $1,350,600 of merchandise (that had cost $975,900) on credit, terms n/30. b. Wrote off $20,800 of uncollectible accounts receivable. c. Received $670,500 cash in payment of accounts receivable. d. In adjusting the accounts on December 31, the company estimated that 2.60% of accounts receivable would be uncollectible. Year 2 e. Sold $1,515,900 of merchandise (that had cost $1,341,800) on credit, terms n/30. f. Wrote off $30,300 of uncollectible accounts receivable. g. Received $1,218,300 cash in payment of accounts receivable. h. In adjusting the accounts on December 31, the company estimated that 2.60% of accounts receivable would be uncollectible. Required: Prepare journal entries to record Liang's Year 1 and Year 2 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system, and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar.) JE Year 1 JE Year 2 Prepare journal entries to record Liang's Year 1 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) View transaction list Journal entry worksheet Sold $1,350,600 of merchandise on credit, terms n/30. Note: Enter debits before credits. General Journal Debit Credit Transaction a(1) Record entry Clear entry View general journal JE Year 1 JE Year 2 > Journal entry worksheet Record cost of goods sold, $975,900. Note: Enter debits before credits. General Journal Debit Credit Transaction a(2) Record entry Clear entry View general journal Journal entry worksheet Wrote off $20,800 of uncollectible accounts receivable. Note: Enter debits before credits. General Journal Debit Credit Transaction b. Record entry Clear entry View general journal Journal entry worksheet In adjusting the accounts on December 31, the company estimated that 2.60% of accounts receivable would be uncollectible. Note: Enter debits before credits. General Journal Debit Credit Transaction d. Record entry Clear entry View general journal JE Year 1 JE Year 2 Prepare journal entries to record Liang's Year 2 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) View transaction list Journal entry worksheet Sold $1,515,900 of merchandise on credit, terms n/30. Note: Enter debits before credits. General Journal Debit Credit Transaction e(1) Record entry Clear entry View general journal Journal entry worksheet Received $1,218,300 cash in payment of accounts receivable. Note: Enter debits before credits. Transaction General Journal Debit Credit g. Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 In adjusting the accounts on December 31, the company estimated that 2.60% of accounts receivable would be uncollectible. Note: Enter debits before credits. General Journal Debit Credit Transaction h. Record entry Clear entry View general journal
