On January 1 of the current year, Neptune, Inc. had the following accounts on its books:
Accounts Receivable$\quad $ $\quad $ $\quad $ $240,000 (debit)
Allowance for Doubtful Accounts$\quad $ $\quad $ 8,000 (credit)
During this year, credit sales were $1,200,000 and collections on account were $1,160,000.
Required:
a. Prepare general journal entries for the following transactions that occurred during the year:
(1) Wrote off N. Purcell's account, $6,800.
(2) Wrote off J. Stein's account, $2,400.
(3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction (2). This amount is not included in the $1,160,000 collections.
(4) On December 31, estimated the year's bad debts expense at 1% of credit sales.
b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the year-end balance sheet.

Question

On January 1 of the current year, Neptune, Inc. had the following accounts on its books: 
Accounts Receivable$\quad $ $\quad $ $\quad $ $240,000 (debit)
Allowance for Doubtful Accounts$\quad $ $\quad $ 8,000 (credit)
During this year, credit sales were $1,200,000 and collections on account were $1,160,000.
Required:
a. Prepare general journal entries for the following transactions that occurred during the year:
(1) Wrote off N. Purcell's account, $6,800.
(2) Wrote off J. Stein's account, $2,400.
(3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction (2). This amount is not included in the $1,160,000 collections.
(4) On December 31, estimated the year's bad debts expense at 1% of credit sales.
b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the year-end balance sheet.

Quizplus · Accepted Answer

The Answer of On January 1 of the current year, Neptune, Inc. had the following accounts on its books: 
Accounts Receivable$\quad $ $\quad $ $\quad $ $240,000 (debit)
Allowance for Doubtful Accounts$\quad $ $\quad $ 8,000 (credit)
During this year, credit sales were $1,200,000 and collections on account were $1,160,000.
Required:
a. Prepare general journal entries for the following transactions that occurred during the year:
(1) Wrote off N. Purcell's account, $6,800.
(2) Wrote off J. Stein's account, $2,400.
(3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction (2). This amount is not included in the $1,160,000 collections.
(4) On December 31, estimated the year's bad debts expense at 1% of credit sales.
b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the year-end balance sheet.

On January 1 of the Current Year, Neptune, Inc \quad

On January 1 of the Current Year, Neptune, Inc $\quad$