he following transactions occurred for Salamon Co. in 2021. The beginning balance of Accounts Receivable is $200,000 and Allowance for Doubtful Accounts (ADA) has a credit balance of $10,000. Salamon recorded sales on account of $750,000. Salamon recorded cash sales of $270,000. Salamon Co. wrote off $8,000 of accounts receivable from Haar Co. that became uncollectible. Salamon Co. uses the allowance method. Salamon collected $625,000 of accounts receivable due. Salamon wrote off $2,500 of receivables from Starr that became uncollectible. Haar repaid Salamon half the amount that had been written off. (2 entries required) a. Prepare journal entries for all the above transactions b. Post the above entries to the T accounts for A/R and ADA and calculate the ending balance of each account. c. Based on the above transactions, if Salamon wants an adjusted ending balance in ADA of $14,000, prepare the necessary year end adjustment.
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.
The following transactions occurred for Salamon Co. in 2021. The beginning balance of
- Salamon recorded sales on account of $750,000.
- Salamon recorded cash sales of $270,000.
- Salamon Co. wrote off $8,000 of accounts receivable from Haar Co. that became uncollectible. Salamon Co. uses the allowance method.
- Salamon collected $625,000 of accounts receivable due.
- Salamon wrote off $2,500 of receivables from Starr that became uncollectible.
- Haar repaid Salamon half the amount that had been written off. (2 entries required)
a. Prepare
b.
c. Based on the above transactions, if Salamon wants an adjusted ending balance in ADA of $14,000, prepare the necessary year end adjustment.
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