Business, 15.04.2020 23:22 Waakkaa

The balance sheet of Starsky Company at January 1, 2019, includes the following. Accounts receivable 500,000 Less: Allowance for doubtful accounts (40,000) $460,000 Transactions in 2019 include the following. 1. Sales on credit for the year were $1,000,000. (all service revenue) 2. Accounts receivable of $870,000 were collected. 3. Customer accounts of $42,000 were written off during the year. 4. At year-end, bad debts were estimated to be 4% of the ending A/R balance (based on the % of A/R method). Make sure to update the A/R and Allowance balance for the transactions above before calculating bad debt expense. Prepare all journal entries necessary to reflect the transactions above.

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Answer from: uglybruja81

The required journal entries are as follows:

Debit Accounts receivable $1,000,000

Credit Sales revenue $1,000,000

(To record sales transactions on credit)

Debit Cash $870,000

Credit Accounts receivable $870,000

(To record collection of accounts receivable)

Debit Allowance for doubtful accounts $42,000

Credit Accounts receivable $42,000

(Write-off of accounts receivable)

Debit Bad debt expense ($2,000 + $23,520) $25,520

Credit Allowance for doubtful accounts $25,520

(Recognition of bad debt expense for the year)

Explanation:

The sales on credit is an addition to accounts receivable since everything was on credit. Collection during the year would definitely reduce the accounts receivable balance, same with the write-off. Therefore, the balance in accounts receivable will be: $500,000 + $1,000,000 - $870,000 - $42,000 = $588,000. 4% of $588,000 is $23,520.Allowance for doubtful accounts had an opening balance of $40,000. The write-off during the year would reduce this balance and throw it into a debit of $2,000. Therefore, balance in the allowance account before adjustment is $2,000 debit. To reinstate this to what the estimated bad debt expense should be, we have to add $2,000 to $23,520 to arrive at $25,520.

Answer from: Quest

answer; test-retest;

Answer from: Quest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

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The balance sheet of Starsky Company at January 1, 2019, includes the following. Accounts receivable...

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