The credit sales of Willy's Department Store for 2020 and 2021 are as follows: Credit sales...

 

Transcribed Image Text:

The credit sales of Willy's Department Store for 2020 and 2021 are as follows: Credit sales 2020 $300,000 2021 $350,000 The company estimates that 2 percent of annual credit sales will prove uncollectible. The unadjusted trial balance at the end of 2020 showed a credit balance of $1,200 in the allowance for doubtful accounts. During 2021, the company wrote off a total of $8,000 of accounts receivable that were deemed uncollectible. It also collected $3,000 from Sophie Broke, a customer whose account had been written off in 2020. Required: 1. Prepare the journal entries to record the write-off of Sophie Broke's account in 2020 and the subsequent payment received from Sophie Broke in 2021. (3 marks) 2. Prepare the adjusting journal entry required at the end of 2021 to record bad debt expense for 2021. (1.5 marks) 3. Compute the balance of the account Allowance for Doubtful Accounts at December 31, 2021, the end of the company's fiscal year. Show details of your calculation. (2.5 marks) The credit sales of Willy's Department Store for 2020 and 2021 are as follows: Credit sales 2020 $300,000 2021 $350,000 The company estimates that 2 percent of annual credit sales will prove uncollectible. The unadjusted trial balance at the end of 2020 showed a credit balance of $1,200 in the allowance for doubtful accounts. During 2021, the company wrote off a total of $8,000 of accounts receivable that were deemed uncollectible. It also collected $3,000 from Sophie Broke, a customer whose account had been written off in 2020. Required: 1. Prepare the journal entries to record the write-off of Sophie Broke's account in 2020 and the subsequent payment received from Sophie Broke in 2021. (3 marks) 2. Prepare the adjusting journal entry required at the end of 2021 to record bad debt expense for 2021. (1.5 marks) 3. Compute the balance of the account Allowance for Doubtful Accounts at December 31, 2021, the end of the company's fiscal year. Show details of your calculation. (2.5 marks)