Liang Company was put into operation on January 1, 2017. In its first two years, the company
Question:
Liang Company was put into operation on January 1, 2017. In its first two years, the company completed a series of transactions that included credit sales, accounts receivable collections, and bad debts. These processes are summarized below.
2017
Sold $1,348,400 (costing $984,500) on credit, maturity number 30.
He set off $18,400 of uncollectible accounts receivable.
$670,200 cash received to pay accounts receivable.
While adjusting the accounts on 31 December, the company estimated that 1.30% of accounts receivable will be uncollectible.
2018
Sold $1,516,800 worth of merchandise on credit (cost $1,347,100), maturity number 30.
He set off $32,000 of uncollectible accounts receivable.
$1,302,100 cash received to pay accounts receivable.
While adjusting the accounts on 31 December, the company estimated that 1.30% of accounts receivable will be uncollectible.
Necessary:
Prepare journal entries to record Liang's 2017 and 2018 summary transactions and year-end adjustments to record bad debt expenses. (The company uses the perpetual inventory system and uses the provisioning method for its receivables.) (Round your interim calculations to the nearest dollar amount.)
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta