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Chapter 8: Q3TI (page 449)

Johnson Company uses the allowance method to account for uncollectible receivables. On September 2, Johnson wrote off a

\(14,000 account receivable from customer J. Mraz. On December 12, Johnson unexpectedly received full payment from Mraz on

the previously written off account. Johnson records an adjusting entry for bad debts expense of \)800 on December 31.

9. Journalize Johnson’s write-off of the uncollectible receivable.

10. Journalize Johnson’s collection of the previously written off receivable.

11. Journalize Johnson’s adjustment for bad debts expense.

Short Answer

Expert verified

(9) Allowance for bad debts account will be debited and accounts receivable-J.Miraz will be credited by $14,000 respectively.

(10) Firstly, Accounts receivable- J. Mraz will be debited and allowance for Bad Debts will be credited by $14,800, respectively. Then, cash account will be debited and accounts Receivable- J. Mraz will be credited by $14,800, respectively.

(11) Bad debt expense will be debited and allowance for bad debts will be credited by $800, respectively.

Step by step solution

01

Definition of bad debts

Bad debt represents the amount owed by the customers that remains uncollectible.

02

Journal entry for written-off

Date

Particulars

Debit

Credit

September 2

Allowance for Bad Debts

$14,000

Accounts Receivable- J. Mraz

$14,000

(Write-off uncollectible account)

03

Journal entry for reinstatement and collection

December 12

Accounts Receivable- J. Mraz

$14,000

Allowance for Bad Debts

$14,000

(Reinstated previously written off bad debts)

December 12

Cash

$14,000

Accounts Receivable- J. Mraz

$14,000

(Collected cash on account)

04

Journal entry for adjustment of bad debts expense

Date

Particulars

Debit

Credit

December 31

Bad Debts Expense

$800

Allowance for Bad Debts

$800

(Adjustment entry for bad debts)

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Most popular questions from this chapter

What does the accounts receivable turnover ratio measure, and how is it calculated?

Recording credit sales and collections

Record the following transactions for Summer Consulting. Explanations are not required.

Apr. 15

Provided consulting services to Bob Jones and billed the customer \(1,500.

18

Provided consulting services to Samantha Cruise and billed the customer \)865.

25

Received \(750 cash from Jones.

28

Provided consulting services to Regan Taylor and billed the customer \)625.

28

Received \(865 cash from Cruise.

30

Received \)1,375 cash, \(750 from Jones and \)625 from Taylor

Applying the direct write-off method to account for uncollectibles

Shawna Valley is an attorney in Los Angeles. Valley uses the direct write-off method to account for uncollectible receivables.

At April 30, 2018, Valley’s accounts receivable totaled \(19,000. During May, she earned revenue of \)22,000 on account and collected \(15,000 on account. She also wrote off uncollectible receivables of \)1,100 on May 31, 2018.

Requirements

1. Use the direct write-off method to journalize Valley’s write-off of the uncollectible receivables.

2. What is Valley’s balance of Accounts Receivable at May 31, 2018?

What is the difference between the percent-of-receivables and aging-of-receivables methods?

Question:

Journalizing note receivable transactions including a dishonored note

On September 30, 2018, Team Bank loaned $94,000 to Kendall Warner on a one-year, 6% note. Team’s fiscal year ends on December 31.

Requirements

1. Journalize all entries for Team Bank related to the note for 2018 and 2019.

2. Which party has a

a. note receivable?

b. note payable?

c. interest revenue?

d. interest expense?

3. Suppose that Kendall Warner defaulted on the note. What entry would the Team record for the dishonored note?
See all solutions

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