Requirement 1. The T-accounts for Allowance for Bad Debts and Bad Debts Expense have been opened for you, assuming the accounts begin with a zero balance. Record the transactions in the general journal (omit explanations), and post to the two T-accounts. (Record debits first, then credits. Exclude explanations from journal entries. Abbreviations used: Adj. = Adjusting entry, Clos. = Closing entry, W/O = Write-off.)

Begin by recording the

2018

transactions in the general journal.

Dec.

31:

Estimated that bad debts expense for the year was

1%

of credit sales of

$500,000

and recorded that amount as expense. The company uses the allowance method.

Date

Accounts and Explanation

Debit

Credit

2018

Dec. 31

Allowance for Bad Debts

5000

(Adj.)

Accounts ReceivableManny Vasquez

5000

Dec.

31:

Made the closing entry for bad debts expense.

Date

Accounts and Explanation

Debit

Credit

2018

Dec. 31

(Clos.)

Now record the

2019

transactions in the general journal.

Jan.

17: Sold inventory to

Manny Vasquez,

$1,000,

on account. Ignore Cost of Goods Sold.

Date			Accounts and Explanation	Debit	Credit
2019
Jan. 17

Jun. 29: Wrote off

Manny Vasquez's

account as uncollectible after repeated efforts to collect from him.

Date			Accounts and Explanation	Debit	Credit
2019
Jun. 29

Aug. 6: Received

$1,000

from

Manny Vasquez,

along with a letter apologizing for being so late. Reinstated

Vasquez's

account in full and recorded the cash receipt.

Start by recording the entry to reinstate

Vasquez's

account.

Date			Accounts and Explanation	Debit	Credit
2019
Aug. 6

Now record the

$1,000

received from

Manny Vasquez.

Date			Accounts and Explanation	Debit	Credit
2019
Aug. 6

Dec.

31:

Made a compound entry to write off the following accounts as uncollectible:

Barry Krisp,

$2,000;

May Milford,

$1,700;

and

Robert Ronson,

$300.

Date			Accounts and Explanation	Debit	Credit
2019
Dec. 31
(W/O)

Dec.

31:

Estimated that bad debts expense for the year was

1%

on credit sales of

$550,000

and recorded the expense.

Date			Accounts and Explanation	Debit	Credit
2019
Dec. 31
(Adj.)

Dec.

31:

Made the closing entry for bad debts expense.

Date			Accounts and Explanation	Debit	Credit
2019
Dec. 31
(Clos.)

Now post the transactions to the two T-accounts. (Enter "0" on the normal side of the account for any zero balances.)

Review the journal entries.

LOADING...

Allowance for Bad Debts					Bad Debts Expense

Requirement 2. Assume the

December

31,

2019,

balance of Accounts Receivable is

$139,000.

Show how net accounts receivable would be reported on the balance sheet at that date.

Balance Sheet (Partial):
Current Assets: