Exercise 1: Presented here are selected transactions related to B. Dylan Corp., which uses perpetual inventory method.

Mar.1

Sold $20,000 of merchandise to Potter Company, terms 2/10, n/30. The cost of the merchandise is $17,000.

11

Received payment in full from Potter Company for balance due.

13

Made credit sales for $13,200, terms 2/10, n/30. The cost of the merchandise is $10,000.

April. 13

Received collections of $8,200 on credit sales, assuming the collection is not eligible for any discount.

May 10

Wrote off as uncollectible $16,000 of accounts receivable. (B. Dylan Corp. uses the percentage of receivables basis to estimate bad debts.)

June 30

The balance in accounts receivable at the end of the first 6 months is $200,000 and the bad debts percentage is 10%. At June 30 the credit balance in the allowance account prior to adjustment is $3,500. Recorded bad debt expense.

July 16

One of the accounts receivable written off in May pays the amount due, $4,000, in full.

Instructions

Prepare the journal entries for the transactions.