Question: On December 31 2015 Ajacks Company reported the following information

On December 31, 2015, Ajacks Company reported the following information in its financial statements:
Accounts receivable ............ $1,193,400
Allowance for doubtful accounts ........ 81,648
Bad debt expense ................... 80,448
During 2016, the company had the following transactions related to receivables:
1. Sales were $10,560,000, of which $8,448,000 were on account.
2. Collections of accounts receivable were $7,284,000.
3. Writeoffs of accounts receivable were $78,000.
4. Recoveries of accounts previously written off as uncollectible were $8,100 (note that this amount is not included in the collections referred to in note 2 above).
a. Prepare the journal entries to record each of the four items above.
b. Set up T accounts for the Accounts Receivable and the Allowance for Doubtful Accounts and enter their January 1, 2016, balances. Then post the entries from part “a” and calculate the new balances in these accounts.
c. Prepare the journal entry to record the bad debts expense for 2016. Ajacks Company uses the aging of accounts receivable method and has prepared an aging schedule, which indicates that the estimated value of the uncollectible accounts as at the end of 2016 is $93,000.
d. Show what would be presented on the statement of financial position as at December 31, 2016, related to accounts receivable.

  • CreatedJune 11, 2015
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