In 2013, Grant Corporation recorded credit sales of $3,200,000 and bad debts expense of $42,000. Write-offs of uncollectible accounts totaled $39,000 and one account, worth $12,000, that had been written off in an earlier year was collected in 2013.
a. Prepare journal entries to record each of these transactions.
(I) Description Debit Credit
1.
2.
To record sales revenue for the year.
(II)
1.
2.
To record bad debt expense for the year.
(III)
1.
2.
To write-off uncollectible accounts for the year.
(IV)
1.
2.
To reverse prior write-off now deemed collectible.
(V)
1.
2.
To record collection of reinstated account.
b. If net accounts receivable increased by $220,000, how much cash was collected from credit customers during the year?(Hint: include the $12,000 recovery above.)
Cash collected during the year: $Answer?
Prepare a journal entry to record cash collections. (Hint: Do not include the $12,000 already included in the journal entries above.)
Description Debit Credit
(VI)
1.
2.
To record cash collections from customers during the year.
c. Set up T-accounts and post each of the transactions in parts a and b to them.
Cash (A)
Accounts Recievable (A)
Allowance for Uncollectibles (XA)
Sales Revenue (R)
Bad Debts Expense (E)
d. Record each of the above transactions in a financial statement effects template to show the effect of these entries on the balance sheet and income statement.
Balance Sheet Income Statement
Transaction Cash Asset+Noncash Assets-Contra Assets=Liabilities+Contributed Capital+Earned Capital Revenues-Expenses=Net Income
(I)
(II)
(III)
(IV)
(V)
(VI)