Accounts Receivable Journal Entries3.On January 1 of the current year, Neptune, Inc. had the following accounts on its books:Accounts ReceivableAllowance for Doubtful Accounts$240,0008,000(debit)(credit)During this year, credit sales were $1,200,000 and collections on account were $1,160,000.Required:a. Prepare general journal entries for the following transactions that occurred during the year:(1) Wrote off N. Purcell's account, $6,800.(2) Wrote off J. Stein's account, $2,400.(3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction(2). This amount is not included in the $1,160,000 collections.(4) On December 31, estimated the year's bad debts expense at 1% of credit sales.Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the year-endb.balance sheet.

Question
Asked Oct 1, 2019

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Accounts Receivable Journal Entries
3.
On January 1 of the current year, Neptune, Inc. had the following accounts on its books:
Accounts Receivable
Allowance for Doubtful Accounts
$240,000
8,000
(debit)
(credit)
During this year, credit sales were $1,200,000 and collections on account were $1,160,000.
Required:
a. Prepare general journal entries for the following transactions that occurred during the year:
(1) Wrote off N. Purcell's account, $6,800.
(2) Wrote off J. Stein's account, $2,400.
(3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction
(2). This amount is not included in the $1,160,000 collections.
(4) On December 31, estimated the year's bad debts expense at 1% of credit sales.
Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the year-end
b.
balance sheet.
help_outline

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Accounts Receivable Journal Entries 3. On January 1 of the current year, Neptune, Inc. had the following accounts on its books: Accounts Receivable Allowance for Doubtful Accounts $240,000 8,000 (debit) (credit) During this year, credit sales were $1,200,000 and collections on account were $1,160,000. Required: a. Prepare general journal entries for the following transactions that occurred during the year: (1) Wrote off N. Purcell's account, $6,800. (2) Wrote off J. Stein's account, $2,400. (3) J. Stein, who is in bankruptcy, paid $800 in final settlement of the account written off in transaction (2). This amount is not included in the $1,160,000 collections. (4) On December 31, estimated the year's bad debts expense at 1% of credit sales. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the year-end b. balance sheet.

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Expert Answer

Step 1

a)

 

Journalize the given entries:

...
Date
Description
Debit
Credit
$6,800
a.1
Allowance for Doubtful Debts
$6,800
Accounts receivable - N. Purcell
(To write off N. Purcell account)
$2,400
а.2
Allowance for Doubtful Debts
$2,400
Accounts receivable - J. Stein
(To write off J. Stein's account)
$800
а.3
Accounts receivable - J. Stein
$800
Allowance for Doubtful Debts
(To reinstate the previously written off
ассount)
Cash
$800
$800
Accounts receivable - J. Stein
(To record collection of account)
31
а.4
December
Bad Debts Expense
$12,000
$12,000
Allowance for Doubtful Debts
(To record allowance for bad debts)
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Date Description Debit Credit $6,800 a.1 Allowance for Doubtful Debts $6,800 Accounts receivable - N. Purcell (To write off N. Purcell account) $2,400 а.2 Allowance for Doubtful Debts $2,400 Accounts receivable - J. Stein (To write off J. Stein's account) $800 а.3 Accounts receivable - J. Stein $800 Allowance for Doubtful Debts (To reinstate the previously written off ассount) Cash $800 $800 Accounts receivable - J. Stein (To record collection of account) 31 а.4 December Bad Debts Expense $12,000 $12,000 Allowance for Doubtful Debts (To record allowance for bad debts)

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