Journal Entries for Credit Losses At the beginning of the year, Houston Company had the following accounts on its books:
Accounts Receivable $264,000 Debit
Allowance for Doubtful Accounts $17,800 Credit
During the year, credit sales were: $2,346,000 and collections on account were: $2,300,000 The following transactions, among others, occurred during the year:
Feb.17 Wrote off R. St. John's account, $7,400
May.28 Wrote off G. Herberger's account, $5,000
Oct.13 Received $1,400 from G. Herberger, who is in bankruptcy proceedings, in final settlement of the account written off on May 28. This amount is not included in the $2,300,000 collections. Dec.15 Wrote off R. Clancy's account, $3,200
Dec.31 In an adjusting entry, recorded the allowance for doubtful accounts at 0.8%
of credit sales for the year. Required
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.
General Journal
Date Description Debit Credit
Dec.31 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To record credit sales for the year. Dec.31 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To record collections on account for the year. Feb.17 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To write off R. St. John's account. May.28 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To write off G. Herberger's account. Oct.13 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To reinstate G. Herberger's account for partial recovery. Oct.13 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To record collection from G. Herberger. Dec.15 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To write-off R. Clancy's account. Dec.31 Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue Accounts ReceivableAccounts Receivable - G. HerbergerAccounts Receivable - R. ClancyAccounts Receivable - R. St. JohnAllowance for Doubtful AccountsBad Debts ExpenseCashSales Revenue To record allowance for doubtful accounts. b. Do not use negative signs with your answers.
Accounts Receivable Less: Allowance for Doubtful Accounts