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Accounts Receivable

Part A:

Prepare journal entries for the following transactions:

$1.$ Wrote$-$off ABC Company account balance of $$12,000$

$2.$ Received payment of $$4,000$ from XYZ Company and wrote$-$off the remaining balance of

$$2,000$

$3.$ Sold merchandise to DEF Company for $$20,000,2/10,$ n$/30.$ The cost of the merchandise

was $$16,000$

$4.$ Collected $$5,000$ of the $$12,000$ previously owed from ABC Company

$5.$ Received payment for one$-$half of amount owed from DEF Company within the discount

period

$6.$ Received the remaining amount owed by XYZ Company of $$2,000$

$7.$ Wrote off the balance of the DEF Company account as uncollectible

Part B:

Recorded the adjusting entry for Bad Debt Expense under the following independent scenarios

$($assume net sales of $$300,000$ for the year and A$/$R balance of $$50,000).$ Please also specify the

balance in the allowance account after adjustment:

A$.$ The allowance account before adjustment has a credit balance of $$3,000.$ Bad debt

expense is estimated at $2\%$ of net sales.

B$.$ The allowance account before adjustment has a credit balance of $$3,000.$ An aging

analysis of A$/$R indicates uncollectible accounts of $$7,500.$

C$.$ The allowance account before adjustment has a debit balance of $$4,000.$ Bad debt

expense is estimated at $3\%$ of net sales.

D$.$ The allowance account before adjustment has a debit balance of $$4,000.$ An aging

analysis of A$/$R indicates uncollectible accounts of $$7,500.$

Part C:

Please answer the following questions:

$1.$ Under the Allowance method, what type of entry results in the recording of an expense?

$2.$ What is the effect on the financial statements of a write$-$off of a customer A$/$R$?$

$3.$ Explain how the matching principle applies to this chapter.

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