Question

Business Course Return to course O n 6 incomplete er Marked out of 5.00 Flag question Journal Entries for Credit Losses At the beginning of the year, Portal Company had the following accounts on its books Accounts Receivable $140,000 Debit Allowance for Doubtful Accounts S R.000 Credit During the year, credit sales were $1,173,000 and collections on account were $1,125.000 54.000 The following transactions, among others, occurred during the year Feb 17 wrote of Lowe's account May 28 Wrote of Byscount Oct. 13 Received $600 from Boyd, who is in bankruptcy proceedings in final settlement of the account written off on May 28 This amount is not included in the $1,175,000 collections Dec 15 Wrote off K. Marshall's account Dec 31 in an adjusting entry recorded the allowance for doubtful accounts at of credit sales for the year 09 a. Prepare journal entries to record the credit sales, the collections on account, and the preceding transactions and adjustment b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet. Date General Journal Description Debit Credit

Answer 1

Portal Company - Part a
Date	Account Title	Debit ($)	Credit ($)
Dec. 31	Accounts receivable	1173000
	Sales revenue		1173000
	( to record the sales )
Dec. 31	Cash	1175000
	Accounts receivable		1175000
	( to record the collection )
Feb. 17	Allowance for doubtful debts	4000
	Accounts receivable - R. lowell		4000
May-28	Allowance for doubtful debts	3400
	Accounts receivable - G. Boyd		3400
Oct.13	Accounts receivable - G. Boyd	600
	Allowance for doubtful debts		600
	( To record the reinstatement )
Oct.13	Cash	600
	Accounts receivable - G. Boyd		600
	( To record the collection )
Dec. 15	Allowance for doubtful debts	1600
	Accounts receivable - K. marshall		1600
Dec. 31	Bad debts expense ( 1173000 * 0.9 % )	10557
	Allowance for doubtful debts		10557
In percentage of sales method, the available balance in Allowance for doubtful debts is not
considered. Simply, the given percentage is applied to the credit sales of the period in question.
Part b
For finding out the balances, lets prepare the T accounts
Allowance for Doubtful debts account
Accounts receivable	4000	Op. Balance	8000
Accounts receivable	3400	Accounts receivable	600
Accounts receivable	1600	Bad debt exp.	10557
Closing balance	10157
	19157		19157
Accounts Receivable Account
Opening balance	140000	Collections	1175000
Credit sales	1173000	Allowance for Doubtful debts	4000
Allowance for Doubtful debts	600	Allowance for Doubtful debts	3400
		Allowance for Doubtful debts	1600
		Cash	600
		Closing Balance	129000
	1313600		1313600
Balance sheet
Assets
Current Assets :-
Accounts receivable	129000
Less:- Allowance for doubtful debts	-10157
NRV	118843