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QUESTION

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?

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