R&B Electrical began operations on 1/1/2017. Their annual reporting period ends 12/31. The trial balance on 1/1/2019 follows: Account title Debit Credit Cash 6,000 Accounts receivable 6,000 Allowance for uncollectable accounts 1,000 Supplies 13,000 Materials 7,000 Equipment 78,000 Accumulated Depreciation 8,000 Land Accounts payable Wages payable Interest payable Income taxes payable Long-term notes payable Common stock (8,000 shares, $0.50 par value 4,000 Additional paid-in capital 80,000 Retained earnings 17,000 Service revenue Wages expense Supplies expense Bad debt expense Interest expense Depreciation expense Income tax expense Misc. expenses Totals 110,000 110,000 Transactions during 2019: $15,000 cash was borrowed on a five-year 8% note payable, dated 3/1/2019. $13,000 cash was paid for land. Earned $215,000 in sales revenues for 2019. $52,000 on account and the remainder in cash. Issued 4,000 additional shares of common stock for cash at $1 per share on 1/1/2019. Incurred $114,000 in miscellaneous expenses for 2019, $20,000 on credit and the rest paid in cash. Collected $34,000 owned on account. Purchased materials with $15,000 cash. Purchased $27,000 supplies on account. Paid $26,000 accounts payable. Signed a $12,000 one-year service contract for work to begin on 2/1/2020. Declared and paid $25,000 in cash dividends. - Given these transactions, prepare journal entries for the 2019 transactions and post them to the ledger
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
|
Account title |
Debit |
Credit |
|
Cash |
6,000 |
|
|
|
6,000 |
|
|
Allowance for uncollectable accounts |
|
1,000 |
|
Supplies |
13,000 |
|
|
Materials |
7,000 |
|
|
Equipment |
78,000 |
|
|
|
|
8,000 |
|
Land |
|
|
|
Accounts payable |
|
|
|
Wages payable |
|
|
|
Interest payable |
|
|
|
Income taxes payable |
|
|
|
Long-term notes payable |
|
|
|
Common stock (8,000 shares, $0.50 par value |
|
4,000 |
|
Additional paid-in capital |
|
80,000 |
|
|
|
17,000 |
|
Service revenue |
|
|
|
Wages expense |
|
|
|
Supplies expense |
|
|
|
|
|
|
|
Interest expense |
|
|
|
Depreciation expense |
|
|
|
Income tax expense |
|
|
|
Misc. expenses |
|
|
|
Totals |
110,000 |
110,000 |
Transactions during 2019:
- $15,000 cash was borrowed on a five-year 8% note payable, dated 3/1/2019.
- $13,000 cash was paid for land.
- Earned $215,000 in sales revenues for 2019. $52,000 on account and the remainder in cash.
- Issued 4,000 additional shares of common stock for cash at $1 per share on 1/1/2019.
- Incurred $114,000 in miscellaneous expenses for 2019, $20,000 on credit and the rest paid in cash.
- Collected $34,000 owned on account.
- Purchased materials with $15,000 cash.
- Purchased $27,000 supplies on account.
- Paid $26,000 accounts payable.
- Signed a $12,000 one-year service contract for work to begin on 2/1/2020.
- Declared and paid $25,000 in cash dividends.
- Given these transactions, prepare
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