Problem - At December 31, 2018, House Co. reported the following information on its balance sheet.
Accounts receivable - $960,000
Less: Allowance for doubtful accounts - 80,000
During 2019, the company had the following transactions related to receivables.
1. Sales on account $3,700,000
2. Sales returns and allowances 50,000
3. Collections of accounts receivable 2,810,000
4. Write-offs of accounts receivable deemed uncollectible 90,000
5. Recovery of bad debts previously written off as uncollectible 29,000
Required -
1. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable.
2. Enter the January 1, 2019, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T-accounts), and determine the balances.