Question

Exercise 2

Accounts Receivable  

The notes and tables below provide information about the Accounts Receivable for C&S, Inc.

Accounts Receivable, net consists of the following:

Year ended Dec 31	2016	2015
Accounts Receivable	104,520	86,904
Less: Allowance for doubtful accounts	(7,946)	(7,360)
Accounts Receivables, net	96,574	79,544

Assume that C&S had total credit sales (before allowances) of $1,400,000 in 2016. At the beginning of 2016, C&S’ accountants estimate that a total of 1% of credit sales will be uncollectible.  

In the questions below, be sure to label each account as Asset (A), Contra-Asset (CA), Liability (L), or Equity (E).

(a) Use the BSE to record credit sales and the allowance for doubtful accounts for C&S for 2016  

(b) Use the BSE to record the C&S write off of accounts receivables for 2016

Answer 1

Part a
Event	Account	Debit	Credit	Account Type
1	Accounts Receivable	$1,400,000		A
	Sales Revenue		$1,400,000	E
	(To record credit sale )
2	Bad Debt Expense ($1,400,000*1%)	$     14,000		E
	Allowance for Doubtful Accounts		$     14,000	CA
	To record estimated uncollectible
Part b
3	Allowance for Doubtful Accounts	$     13,414		CA
	Accounts Receivable		$     13,414	A
	to record receivable written off
	Beginning Balance of Allowance		$        7,360
	Add: Recorded in 2016		$     14,000
	Less: Ending balance of allowance		$      -7,946
	Write off amount		$     13,414