Question

Question 3: Del Monte Company's balance sheet as of December 31, 2018 showed Accounts Receivable debit balance of $780,000 and Allowance for Doubtful Accounts credit balance of $16,900. During January 2019, the transactions affecting accounts receivable were as follows: a) Sales on account $ 160,000 b) Sales returns and allowances 23,000 c) Cash collections from customers 142,200 d) Accounts receivable from Ruari Inc. written off 9,100 After an analysis of an aging schedule of all customer's accounts on January 31, 2019, Del Monte decided that Allowance for Doubtful Accounts should be adjusted to a balance of $15,800 Required: a) Using January 1 as the transaction date, record the entry in the general journal for each of the four above items and the adjusting entry on January 31 to adjust the allowance for doubtful accounts. b) Record the entries in the general journal assuming that on July 31, 2019, seven months after the receivable from Ruari Company had been written-off as worthless, Ruari Company settled the account by sending Del Monte Co. a check for $5,300.

Answer 1

		Journal Entries In the Books of Del Monte Company					Debit ($)	Credit ($)
A	1	a) Sale's on Account
		01-01-2019	Accounts Receivable A/c				1,60,000
			To Sales A/c					1,60,000
			(Being Sales Made on Credit)
		b) Sales Returned And Allowance
		01-01-2019	Sales Returns & Allowance A/c				23,000
			To Accounts Receivable A/c					23,000
			(Being Sales are Returned)
		c) Cash Collections From Customers
		01-01-2019	Cash A/c				1,42,200
			To Accounts Receivable A/c					1,42,200
			(Being Cash Received From Accounts Receivables)
		d) Accounts Receivable from Ruari Inc .written off
		01-01-2019	Allowance For Doubt ful Accounts				9,100
			To Accounts Receivable A/c					9,100
			(Being Bad Debts written off )
	2	Adjusting Entry For Allowance for doubt full accounts
		31-01-2019	Bad Debts A/c				8,000
			To Allowance for Doubtful Accounts A/c					8,000
			(Being allowance for doubtful accounts for made)
			(working note 1 )
B	1	31-07-2019	Accounts Receivable A/c				5,300
			To Allowance for DoubtFul Accounts A/c					5,300
			(Being Bad Debts Were Collected, Reverse entry passed)
		Workings Forming Part of Answer
									Amt($)
	1	A	Adjusted Closing Balance of Allowance for Doubtful Accounts(31-01-2019)						15,800
		B	Add: Actual Written of Amount During the month (Ruari Inc. Written Off)						9,100
			Less: Opening Balance as on 01-01-2019						-16,900
				Provision for Bad Debts Were Made During the month					8,000