The following balances are taken from the unadjusted trial balance of Penner Inc. at its year-end, December 31, 2015.
An ageing of accounts receivable at December 31, 2015 reveals the following information:
The balance for R. Laws of $1,000 is over 90 days past due. It is included in the ageing of accounts receivable balance and has not yet been written off.
Part A: 2015
Required: Prepare journal entries to record:
- The write-off of R. Laws’ account of $1,000 on December 31, 2015. (Hint: Recalculate the accounts receivable balance after the writeoff.)
- The appropriate adjusting entry to set up the required balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2015. (Hint: Remember that R. Laws’ account has been written off.)
Part B: 2016
The following transactions were made in 2016.
|
a. |
Sales on account were $700,000. |
|
b. |
Collections of accounts receivable amounted to $599,000. |
|
c. |
Penner wrote off $10,000 of accounts receivable. |
|
d. |
An ageing of accounts receivable at December 31, 2016 revealed the following information: |
Required: Prepare the appropriate adjusting entry to set up the required Allowance for Doubtful Accounts general ledger account balance at December 31, 2016.
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