On December 31, 2020, Cheyenne Corp. estimated that 3% of its net accounts receivable of $435,200 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, 2020. On May 11, 2021, Cheyenne Corp. determined that the Jeff Shoemaker account was uncollectible and wrote off $2,176. On June 12, 2021, Shoemaker paid the amount previously written off. Prepare the journal entries on December 31, 2020, May 11, 2021, and June 12, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Question

Business

Ray Bright

17 November, 06:09

On December 31, 2020, Cheyenne Corp. estimated that 3% of its net accounts receivable of $435,200 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, 2020. On May 11, 2021, Cheyenne Corp. determined that the Jeff Shoemaker account was uncollectible and wrote off $2,176. On June 12, 2021, Shoemaker paid the amount previously written off. Prepare the journal entries on December 31, 2020, May 11, 2021, and June 12, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

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Quinten Brooks · Answer 1

The journal entries are shown below:

On December 31, 2020

Bad debt expense A/c Dr

To Allowance for doubtful debts

(Being allowance for doubtful debts is recorded)

The computation is shown below:

= Accounts receivable * estimated percentage given

= $435,200 * 3%

= $13,056

On May 11, 2021

Allowance for doubtful debts A/c Dr $2,176

To Accounts receivable $2,176

(Being debtors written off is recorded)

On June 12, 2021

Accounts receivable $2,176

To Allowance for doubtful debts A/c Dr $2,176

(Being reversal entry is passed)

Cash A/c Dr $2,176

To Accounts receivable $2,176

(Being cash received for written off amount)