Question: Lopez Company began operations on January 1, 2010. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
2010
a. Sold $1,803,750 of merchandise (that had cost $1,475,000) on credit, terms n/30.
b. Wrote off $20,300 of uncollectible accounts receivable.
c. Received $789,200 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.
2011
e. Sold $1,825,700 of merchandise (that had cost $1,450,000) on credit, terms n/30.
f. Wrote off $28,800 of uncollectible accounts receivable.
g. Received $1,304,800 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible. Required Prepare journal entries to record Lopez's 2010 and 2011 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system. Round amounts to the nearest dollar.)