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Chapter 7: 5QS_1 (page 343)

Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off an \(800 account of a customer, C. Green. On March 9, it receives a \)300 payment from Green.

  1. Prepare the journal entry or entries for January 31.

Short Answer

Expert verified

Uncollectible is a term used in the accounting terminology which depicts the amount of debt that an organization is unsuccessful in collecting from itsdebtors post the sale of goods and services.

Step by step solution

01

Introduction

The journal entry for January 31 will be recorded as below in the books of Gomez Corp, which is using the allowance method for recording their bad debt expense.

02

Journal Entry

Date

Particulars

Debit

Credit

January 31

Allowance for doubtful accounts

$800

Accounts receivables

$800

(To record the amount of doubtful accounts)

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Most popular questions from this chapter

Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Suntrust Bank Card, a 4% service charge for credit card sales is assessed. The second credit card that Levine accepts is the Continental Card. Continental assesses a 2.5% charge on sales for using its card. Prepare journal entries to record the following selected credit card transactions of Levine Company.

Apr. 8 Sold merchandise for \(8,400 (that had cost \)6,000) and accepted the customer's Sunburst Bank Card.

12 Sold merchandise for \(5,600 (that had cost \)3,500) and accepted the customer’s Continental Card.

Jarden Company has credit sales of \(3,600,000 for year 2017. On December 31, 2017, the company’s Allowance for Doubtful Accounts has an unadjusted credit balance of \)14,500. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.

Required:

3. On June 30, 2018, Jarden Company concludes that a customer’s $4,750 receivable (created in 2017) is uncollectible and that the account should be written off. What effect will this action have on Jarden’s 2018 net income? Explain.

Prepare journal entries to record the following selected transactions of Ridge Company.

Mar. 21 Accepted a $9,500, 180-day, 8% note dated March 21 from Tamara Jackson in granting a time extension on her past-due account receivable.

Sep. 17 Jackson dishonored her note when it is presented for payment.

Dec. 31 After exhausting all legal means of collection, Ridge Company wrote off Jackson’s account against the Allowance for Doubtful Accounts.

At December 31, 2017, Ingleton Company reports the following results for the year:

Cash sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(1,025,000

Credit sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,342,000

In addition, its unadjusted trial balance includes the following items:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . \)575,000 debit

Allowance for doubtful accounts . . . . . . . . . . . . . 7,500 credit

Required

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

Hitachi, Ltd., reports total revenues of ¥9,616,202 million for its current fiscal year, and its current fiscal year-end unadjusted trial balance reports a debit balance for trade receivables (gross) of ¥2,797,935 million

b. Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be 2.0% of year-end trade receivables (gross) and its unadjusted trial balance reports a credit balance of ¥10,000 million for the Allowance for Doubtful Accounts.
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