Sherrill Company completed the following transactions:
2015 Jan. 9 Sold merchandise on account to Rick's Supply, $1,600.
Jan. 15 Wrote off the account of Pete Redding as uncollectible because of his death, $1,000.
Mar. 17 Received $550 from Romo Co., whose account had been written off in
2014. The account was reinstated and the collection recorded.
Apr. 9 Received 18% of the $4,400 owed by Lane Davis. The remainder was written off as uncollectible.
June 15 The account for Mac's Garage was reinstated for $1,100. The account was written off 3 years ago and collected in full today.
Oct. 18 Prepared a compound entry to write the following accounts off as uncollectible: Jim's Diner, $200; Kailey Auto, $420; Ralph's Hardware, $700.
Nov. 12 Sold merchandise on account to J.B. Rug, $1,700.
Dec. 31 Based on an aging of Accounts Receivable, it was estimated that $7,400 will be uncollectible out of a total of $175,000 in Accounts Receivable.
Dec. 31 Closed Bad Debts Expense to Income Summary.
From the preceding as well as the following additional data, complete a-c:
_______________________________Acct. No. Balance
Allowance for Doubtful Accounts.........114...................$4,400
Income Summary..............................312........................-
Bad Debts Expense...........................612........................-
Total current assets $290,400
a. Journalize the transactions. The company uses the periodic method.
b. Post to Allowance for Doubtful Accounts, Income Summary, and Bad Debts Expense accounts as needed. (Be sure to record the beginning balance in the Allowance account in the working papers that accompany this text.)
c. Prepare a current assets section of the balance sheet. Ending balances needed are as follows: Cash, $12,500; Accounts Receivable, $175,000; Office Supplies, $2,150; Merchandise Inventory, $107,000; Prepaid Rent, $1,150.