Question

Liang Company began operations on January 1, 2012. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows:
2012
a. Sold $ 1,345,434 of merchandise (that had cost $ 975,000) on credit, terms n/30.
b. Wrote off $ 18,300 of uncollectible accounts receivable.
c. Received $ 669,200 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.
2013
e. Sold $ 1,525,634 of merchandise (that had cost $ 1,250,000) on credit, terms n/30.
f. Wrote off $ 27,800 of uncollectible accounts receivable.
g. Received $ 1,204,600 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.

Required
Prepare journal entries to record Liang’s 2012 and 2013 summarized transactions and its year- end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable. Round amounts to the nearest dollar.)



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  • CreatedNovember 26, 2013
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