Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Glen, while sitting in BUSI 321, thought of an amazing new entrepreneurial idea of providing the university with the pleasure of amazing, home-baked chocolate chip

image text in transcribed
Glen, while sitting in BUSI 321, thought of an amazing new entrepreneurial idea of providing the university with the pleasure of amazing, home-baked chocolate chip cookies. After mcorporating and receiving the TWU Busmess Alumni Award, and receiving enormous orders for his cookies, his business decided to offer cash discounts to accelerate collection of payment On Nov. 28, 2019, Johnston LLC sold $10 million cookies on account, term 5/10 n/30. On Dec. 3rd, Rebecca LTD (who purchased 30% of the initial cookies sold on Nov. 28, 2019) paid off her account. Jared SP (who bought 25% of the initial batch from Nov. 28) paid off his account on Dec. 15, 2019. Johnston LLC uses gross method to account for cash discounts. Requirements: o Record the Joumal Entries for Johnston's sale on account on Nov. 28, 2019. o Record the Journal Entries to show the payment of accounts by Rebecca and Jared. On Feb. 1, 2020, Johnston LLC factored the remaining 45% of receivables to LaVasseur INC with recourse. There was a 5% holdback and 2% financing fee. On Feb. 29, 2020 LaVasseur collected $4.4 million of the receivables, but was unable to collect $100,000 of their receivables due to bad debt. Requirements: Record the joum al entries on the books of both Johnston LLC and LaVasseur INC for the factored receivables, collection of cash, bad debt and final settlement. Johnston LLC determines the allowance for doubtful accounts by estimating 20% of its closing accounts receivables. At the end of 2020, the balances of accounts receivable was $8 million and the allowance account was $3 million. In 2021, Johnston LLC had cookie sales of $20 million (all on account). On March 31, 2021 Johnston wrote off $600,000 of accounts receivable. Later, on June 31, 2021 Johnston LLC collected a $350,000 of receivables that had been previously written off as uncollectible During 2021 Johnson had $11 million in collections (not including the recovery from write-off). Requirements: o Provide the joumal entries for the write-off and recovery of accounts receivable. o Determine the ending accounts receivable and allowance account balances for 2021, and calculate the bad debt expense for 2021. o Provide the journal entry for the 2021 bad debt expense

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics Theory And Applications

Authors: Edgar K. Browning, Mark A. Zupan

13th Edition

1119368928, 9781119368922

More Books

Students also viewed these Accounting questions

Question

Suppose you want to calculate P(a Answered: 1 week ago

Answered: 1 week ago

Question

Make eye contact when talking and listening

Answered: 1 week ago

Question

Do not go, wait until I come

Answered: 1 week ago

Question

Pay him, do not wait until I sign

Answered: 1 week ago