Prepare journal entries to record the credit sales

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Reference no: EM131889744

Problem

Journal Entries for Credit Losses At the beginning of the year, Whitney Company had the following accounts on its books:

Accounts Receivable	$130,000	Debit
Allowance for Doubtful Accounts	$8,000	Credit
During the year, credit sales were:	$1,173,000
and collections on account were:	$1,175,000

The following transactions, among others, occurred during the year:

Feb.17	Wrote off R. Lowell's account,	$4,000
May.28	Wrote off G. Boyd's account,	$2,400
Oct.13	Received $600 from G. Boyd, who is in bankruptcy proceedings, in final settlement of the account written off on May 28. This amount is not included in the $1,175,000 collections.
Dec.15	Wrote off K. Marshall's account.	$1,600
Dec.31	In an adjusting entry, recorded the allowance for doubtful accounts at of credit sales for the year.	0.9%

a. Prepare journal entries to record the credit sales, the collections on account, and the preceding transactions and adjustment.

b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.

Reference no: EM131889744

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