For the fiscal year ended December 31, 2016, Alpha Company had credits sales that amounted to $300,000. Historically, 2.5% of credit sales are uncollectible.
1.For the fiscal year ended December 31, 2016, Alpha Company had credits sales that amounted to $300,000.
Historically, 2.5% of credit sales are uncollectible. Alpha Company uses the percentage of sales method to determine its uncollectible accounts. The balance before any end of the year adjusting entry in the Allowance for Uncollectable Accounts is a credit value of $1,575. Use this information to prepare the adjusting General Journal entry (without explanation) for the fiscal year. If no entry is required then write “No Entry Required.”
2.Alpha Company uses an allowance method for recording bad debts. On July 15, 2016 Alpha Company was advised of the bankruptcy of the Broken Corporation and wrote off their $7,000 of accounts receivable. Suddenly, on August 25, 2016 Broken won the Maryland State Mega Millions. Without warning, on August 26, Alpha Company received in full the payment for Broken’s past debt. Use this information to prepare the General Journal entries (without explanation) for the August 26, 2016 event. If no entry is required then write “No Entry Required.”
3.On December 21, 2016, Alpha Company accepted from Bravo a $10,000, 90-day, 8% note in lieu of an existing $10,000 account receivable. Alpha Company’s fiscal year-end is December 31. Use this information to prepare for the Alpha Company the General Journal entries (without explanation) for December 21, 2016. If no entry is required then write “No Entry Required.”
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