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Explanation: The December 31, 2016 balance sheet for Campbell, Inc. included the following :
Explanation:
1. The December 31, 2016 balance sheet for Campbell, Inc. included the following:
Debit Credit
Accounts receivable $ 145,000
Allowance for doubtful accounts 12,500
Allowance for sales returns and allowances 7,500
During 2017, the following transactions occurred:
Sales on account $760,000. Campbell uses the gross method for sales recording.
Sales returns and allowances, $37,000
Collections from customers, $695,000 of which $65,000 qualified for a 1% discount.
Accounts written off $15,000.
Previously written off accounts of $3,500 were collected.
At year-end, the allowance for doubtful accounts was estimated to need a balance equal
to 6.5% of the gross ending accounts receivable balance.
Journalize the 2017 transactions. Disregard any impact on inventory.
DateAccount TitlesDebitCredit
1) Dec.31Accounts Receivable760,000
Sales Revenue760,000
2)Sales Returns and Allowances37,000
Accounts Receivable37,000 ------> this should be Allowance for sales returns and allowances (contra asset like allowance for doubtful accounts)
3)Cash 694.350
Sales Discounts (65,000 x 1%) 650
Accounts Receivable695,000
4) Allowance for Doubtful Accounts15,000
Accounts Receivable15,000
5)Accounts Receivable 3,500
Allowances for Doubtful Accounts3,500
Cash 3,500
Accounts Receivable3,500
6)Bad Debt Expense 12,422.50 -------> Amount should be 175
Allowance for Doubtful Accounts12,422.50
This is what I got for the journal entries for 2017. I am not really sure if I got the correct totals for the gross ending accounts receivable balance, or the allowance for doubtful accounts either. I made T accounts and came up with a debit balance in accounts receivable of 206.500 and 6.5% of that is 13,244.50. Then I got a balance in the allowance account of credit 1,000. Can you please help me with this?
