Chapter $7$ Homework

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$15$

Liang Company began operations in Year $1.$ 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.

$6\mathrm{.}25$

Year $1$

a$.$ Sold $$1,352,800$ of merchandise on credit $($that had cost $$983,800),$ terms $\frac{n}{30}.$

b$.$ Wrote off $$19,900$ of uncollectible accounts receivable.

c$.$ Received $$667,400$ cash in payment of accounts receivable.

d$.$ In adjusting the accounts on December $31,$ the company estimated that $3\mathrm{.}10\%$ of accounts receivable would be uncollectible.

Year $2$

e$.$ Sold $$1,525,300$ of merchandise $($that had cost $$1,302,900)$ on credit, terms $\frac{n}{30}$

f$.$ Wrote off $$31,700$ of uncollectible accounts receivable.

g$.$ Received $$1,130,600$ cash in payment of accounts receivable

h$.$ In adjusting the accounts on December $31,$ the company estimated that $3\mathrm{.}10\%$ of accounts receivable would be uncollectible.

Required:

Prepare journal entries to record Liang's Year $1$ and Year $2$ 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.$)$ Note: Round your intermediate calculations to the nearest dollar.

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Journal Entry Journal Entry

Year $1$

Year $2$

Prepare journal entries to record Liang's Year $2$ 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.$)$

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$\backslash$table$[[$No$,$Transaction,General Journal,Debit,Credit$],[$f$,$e$(1),$Accounts receivable,$1,525,300,]]$