Sherman Co. began operations on January 1, 2017, and completed several transactions during 2017 and 2018 that
Question:
Sherman Co. began operations on January 1, 2017, and completed several transactions during 2017 and 2018 that involved sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
2017
a. Sold $685,350 of merchandise on credit (that had cost $500,000), terms n/30.
b. Received $482,300 cash in payment of accounts receivable.
c. Wrote off $9,350 of uncollectible accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1% of accounts receivable will be uncollectible.
2018
e. Sold $870,220 of merchandise on credit (that had cost $650,000), terms n/30.
f. Received $990,800 cash in payment of accounts receivable.
g. Wrote off $11,090 of uncollectible accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1% of accounts receivable will be uncollectible.
Required
Prepare journal entries to record Sherman’s 2017 and 2018 summarized transactions and its year-end adjusting entry 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.)
Accounts ReceivableAccounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
Financial Accounting Information for Decisions
ISBN: 978-1259917042
9th edition
Authors: John J. Wild