Problem 7-4A (Algo) Accounts receivable transactions and bad debts adjustments LO C1, P2, P3

Liang Company began operations in Year 1. 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.

Year 1

1. Sold $1,345,000 of merchandise on credit (that had cost $981,500), terms n/30.
2. Wrote off $18,700 of uncollectible accounts receivable.
3. Received $671,800 cash in payment of accounts receivable.
4. In adjusting the accounts on December 31, the company estimated that 3.10% of accounts receivable would be uncollectible.

Year 2

1. Sold $1,533,900 of merchandise (that had cost $1,255,500) on credit, terms n/30.
2. Wrote off $32,600 of uncollectible accounts receivable.
3. Received $1,217,100 cash in payment of accounts receivable.
4. In adjusting the accounts on December 31, the company estimated that 3.10% of accounts receivable would be uncollectible.

Required:

Prepare journal entries to record Liangs Year 1 and Year 2 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system, and it applies the allowance method for its accounts receivable.)

Note: Round your intermediate calculations to the nearest dollar.

Complete this question by entering your answers in the tabs below. Prepare journal entries to record Liang's Year 1 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system, and it applies the allowance method for its accounts receivable.) Journal entry worksheet 5 Sold $1,345,000 of merchandise on credit, terms n/30. Note: Enter debits before credits