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mere to search Signature: Date: Assignment 1 HRM210 W2020 Name: Student ID 3. BeleVu Supplies showed the following se Accounts Receivable Supplies showed the following selected adiusted balances at its December 31, 2019, year-end: Dec. 31/16 Balance 490,000 Allowance for Doubtful Accounts 16,400 Dec. 31/16 Balance During the year 2020, the following selected transactions occurred: a. Sales totalled $2,800,000, of which 25% were cash sales (cost of sales $1,804,000). b. Sales returns were $108,000, half regarding credit cales. The returned merchandise was scrapped c. An account for $24,000 was recovered. d. Several accounts were written off; $26,000. e. Collections from credit customers totalled $1.790,000 (excluding the recovery in (C) above). Part A Required: 1. Journalize transactions (a) through (e). You may find it useful to post your entries to T-accounts for Accounts Receivable and Allowance for Doubtful Accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Cash ........... 700,000 2,100,000 2,800,000 1,804,000 1,804,000 108,000 Accounts Receivable................ Sales................... To record sales; 25% * $2,800,000 total sales - cash sales of $700,000 Cost of Goods Sold ........................ .......... ........ Merchandise Inventory ................ To record cost of sales. Sales Returns and Allowances.............................. Accounts Receivable ............... ............ ....... Cash ......................................... . . ... To record return of defective merchandise to be scrapped. I Cash Allowance for doubtful accounts An account Recovered I , 54,000 54,000 240vol 24000 I Page 4 of 7

Answer 1

Part A - Journal Entries:

Sl.No.		Journal Enrty	Debit	Credit
c)		Cash A/c Dr	$24,000
		To Accounts receivable A/c		$24,000
		Being the amount recovered from the Customers)
d)		Bad and Doubtful Debts A/c Dr	$26,000
		To Acounts Receivable A/c		$26,000
		(Being several accounts were written off)
e)		Cash A/c Dr	$1,790,000
		To Accounts receivable A/c		$1,790,000
		(Being the amount received from customers)

Part B:

2. Adjusting Entry for bad debts:

Estimated Bad Debts = 1% of Net Credit Sales =$2,046,000*1% = $20,460

Net Credit Sales = Credit Sales less Credit Sales Returns = ($2,800,000*75%) - ($108,000*50%) = $2,046,000

Name of the Account	Debit	Credit
Allowance for doubtful Debts	$20,460
Accounts Receivable Account		$20,460

3. Balance in Allowance for Doubtful Debts on the December 31,2020 is $20,460 and it is shown under the Aset Side of the balance sheet.

4. Bad debt Expense on the income Statement is $26,000 and it will be shown as an expenditure.

Part C : Adjusting Entry for bad debts

Estimated Bad debts is 3% of Outstanding Receivables = $230,000*3% = $6,900

Name of the account	Debit	Credit
Allowance for doubtful debts	$6,900
To accounts receivable A/c		$6,900

Calculations:

Accounts Receivable Account

Debit	Amount	Credit	Amount
To Sales A/c	$2,100,000	By sales Returns	$54,000
		By Bad debts A/c	$26,000
		By Cash A/c	$1,790,000
		by Bal C/d	$230,000
Total	$2,100,000	Total	$2,100,000

Allowance for Doubtful Accounts

Debit	Amount	Credit	Amount
To Accounts receivable A/c	$6,900	By bal c/d	$6900
Total	$6900	Total	$6900

6.The balance of Allowance for doubtful debts is $ 6900 and it is shown under assets side.

7. The bad debt expense on the income statement is $ 26,000 and it is shown under expenditure side.