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Liang Company began operations on January 1, 2016. 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:2016a. Sold $1,345,434 of merchandise (that had cost $975,000) on credit, terms n/30.b. Wrote off $18,300 of uncollectible accounts receivable.c. Received $669,200 cash in payment of accounts receivable.d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.2017a. Sold $1,525,634 of merchandise on credit (that had cost $1,250,000), terms n/30.b. Wrote off $27,800 of uncollectible accounts receivable.c. Received $1,204,600 cash in payment of accounts receivable.d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.Required:Prepare journal entries to record Liang’s 2016 and 2017 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.) (Round your intermediate calculations to the nearest dollar amount.)

Respuesta :

Answer:

Journal Entries to Record 2016 Transactions

Account Receivacble Debit     1,345,434$

Sales Credit                               1,345,434$

Cost of Good Sold Debit            975,000$

Inventory Credit                           975,000$

Bad Debt Expense Debit             18,300$

Account Receivable Credit          18,300$

Cash Debit                                     669,299$

Account Receivable Credit           669,299$

Bad Debt expense Debit               986,901$

Provision Liability  Credit               986,901$

(1345343-18300-669200)*1.5%

Journal Entries to Record 2017 Transactions

Account Receivacble Debit     1,525,634$

Sales Credit                              1,525,634$

Cost of Good Sold Debit           1.250,000$

Inventory Credit                          1.250,000$

Bad Debt Expense Debit             27,800$

Account Receivable Credit          27,800$

Cash Debit                                     1,204,600$

Account Receivable Credit           1,204,600$

Bad Debt expense Debit                4,399$

Provision Liability  Credit                4,399$

(1525634-27800-1204600)*1.5%

Based on information provided in the question above entries will be passed.

*It is assumed that bad debt written off relates to same year sales.

Parrain

Based on the given entries, the journal entries in 2016 will be:

Date               Account title                                           Debit            Credit

2016              Accounts receivable                            $1,345,434

                     Sales                                                                         $1,345,434

Date               Account title                                           Debit            Credit

2016               Cost of goods sold                             $975,000

                      Inventory                                                                  $975,000

Date               Account title                                           Debit            Credit

2016               Allowance for doubtful debt                $18,300

                      Accounts Receivable                                                $18,300

Date               Account title                                           Debit            Credit

2016              Cash                                                      $669,200

                     Accounts Receivable                                                $669,200

Date               Account title                                           Debit            Credit

2016               Bad debt expenses                              $28,169

                      Allowance for doubtful debts                                     $28,169

The journal entries in 2017 will be:

Date               Account title                                           Debit            Credit

2017               Accounts receivable                           $1,525,634

                     Sales                                                                        $1,525,634

Date               Account title                                           Debit            Credit

2017               Cost of goods sold                             $1,250,000

                      Inventory                                                               $1,250,000

Date               Account title                                           Debit            Credit

2017               Allowance for doubtful debt                $27,800

                      Accounts Receivable                                                $27,800

Date               Account title                                           Debit            Credit

2017              Cash                                                      $1,204,600

                     Accounts Receivable                                            $1,204,600

Date               Account title                                           Debit            Credit

2017               Bad debt expenses                              $32,199

                      Allowance for doubtful debts                                    $32,199

What are the journal entries?

Accounts receivables are assets so when they increase, they will be debited. Sales are equity are so will be credited.

Cost of goods sold will also be debited as it is an expense along with bad debt expenses. Inventory is reducing when we sell goods so it will be credited because assets are credited when they reduce.

Cash is an asset that will be debited when Accounts Receivables pay back some of the cash they owe.

Find out more on journal entries at https://brainly.com/question/14279491.

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