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On December 31, 2019, Ling Co. estimated that 2% of its net accounts receivable of $450,000 will become uncollectible. The company recorded this amount as an addition to Allowance for Doubtful Accounts. The allowance account had a zero balance before adjustment on December 31, 2019. On May 11, 2020, Ling Co. determined that the Jeff Shoemaker account was uncollectible and written off $1,100. On June 12, 2020, Shoemaker paid the amount previously written off. Prepare the journal entries on December 31, 2019, May 11, 2020, and June 12, 2020.

Instructions

Prepare the journal entries on December 31, 2019, May 11, 2020, and June 12, 2020.
Journalize entries for the sale of accounts receivable. LO 2)

Respuesta :

hoangkhangpham94

Answer:

December 31 2019

Dr Bad Debt Expenses                                         9,000

Cr Allowance for uncollectible debt                   9,000

(to record bad debt expenses at year end 2019)

May 11 2020

Dr Allowance for Doubtful Debt                           1,100

Cr Account Receivable                                         1,100

(to record written-off of Receivable from Jeff Shoemaker)

June 12 2020

Dr Account Receivable                                                1,100

Cr Allowance for Doubtful Debt                                 1,100

(to reverse the written-off of Receivable from Jeff)

Dr Cash                                   1,100

Cr Account Receivable         1,100

(to record collection of Receivable from Jeff).

Explanation:

Further calculation note for journal entry in 31 December 2019: As the allowance for doubtful debt account is zero in 31st Dec 2019, the increase in this account balance is calculated as Net Account Receivable at the time x Uncollectible Estimation = 450,000 x 2% = $9,000.

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