The balance sheet of Starsky Company at December 31, 2019, includes the following. Notes receivable $36,000 Accounts receivable 182,100 Less: Allowance for doubtful accounts 17,300 $200,800 Transactions in 2020 include the following. 1. Accounts receivable of $138,000 were collected including accounts of $60,000 on which 2% sales discounts were allowed. 2. $5,300 was received in payment of an account which was written off the books as worthless in 2019. 3. Customer accounts of $17,500 were written off during the year. 4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable.

Question

Tyrell Kramer

Business

24 May, 12:49

The balance sheet of Starsky Company at December 31, 2019, includes the following. Notes receivable $36,000 Accounts receivable 182,100 Less: Allowance for doubtful accounts 17,300 $200,800 Transactions in 2020 include the following. 1. Accounts receivable of $138,000 were collected including accounts of $60,000 on which 2% sales discounts were allowed. 2. $5,300 was received in payment of an account which was written off the books as worthless in 2019. 3. Customer accounts of $17,500 were written off during the year. 4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable.

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Josh Guerra · Answer 1

Journal Entry

Explanation:

1. Cash Dr, $136,800

Sales Discount Dr, $1,200

($60,000 * 2%)

To Accounts receivable $138,000

(Being cash is recorded)

2. Accounts receivable Dr, $5,300

To Allowance for doubtful accounts $5,300

(Being written off is recorded)

Cash Dr, $5,300

Accounts receivable $5,300

(Being payment received is recorded)

3. Allowance for doubtful accounts Dr, $17,500

To Accounts receivable $17,500

(Being written off is recorded)

4. Bad Debts expense Dr, $14,900

=$20,000 - ($17,300 + $5,300 - $17,500)

To Allowance for doubtful accounts $14,900

(Being bad debt expenses is recorded)