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5 October, 23:44

At December 31, 2018, Martinez Corp. Imports reported this information on its balance sheet: Accounts Receivable $628,200 Less: Allowance for Doubtful Accounts 37,300 During 2019, the company had the following transactions related to receivables:

(1) Sales on account $2,936,400

(2) Sales returns and allowances 94,480

(3) Collections of accounts receivable 2,528,500

(4) Write-offs of accounts receivable deemed uncollectible 41,620

(5) Recovery of bad debts previously written off as uncollectible 16,440

(a) Prepare the journal entries for each of these five transactions.

(b) Prepare the journal entry to record bad debt expense for 2019, assuming that estimated bad debts are 6% of total accounts receivable.

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  1. 6 October, 02:21
    0
    Answer: Martinez Corp journal S

    Date

    1. Receivable Dr 2,936400

    Sales Cr. 2936400

    Narration. Sales on account.

    2. Saler. Dr. 94,480

    Returns inwards Cr 94,480

    Narration. Returns on good sold.

    3. Bank Dr 2,528,500

    Receivable Cr. 2,528,500

    Narration. Receipt on receivables

    4. Bad debt Dr 41,620

    Receivable Cr 41,620

    Narration. Posting of unrecoverable receivable.

    5. Receivable Dr 16440

    Bad debt Cr 16440

    Narration. Bad debt previously written off now revovered.

    B. Balance on receivables as at 2019

    S

    Balance b/f 628,200

    Add sales2936400

    Less returns 94480

    Less receipt 2528500

    Less bad debt 41620

    Balance is 900,000

    Estimate of bad debt is 6% of 900000

    *54,000

    Journal entry

    Income statement Dr 16700

    Allowance doubtful debt Cr 16700

    Explanation:

    The increase in allowance for provision for doubtful debt from S37300 to S54000 of S16700 is debited to income statement and the credit to the provision account to bring it to S54000
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