Indiv 3.docx - ACCT 3220 Group Exercise#3 Fall 2018 Part I At the beginning of December 20X6 Elam Enterprises had a debit balance in accounts receivable

Indiv 3.docx - ACCT 3220 Group Exercise#3 Fall 2018 Part I...

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ACCT 3220 Group Exercise #3 Fall 2018 Part I At the beginning of December 20X6, Elam Enterprises had a debit balance in accounts receivable of $400,000 and a credit balance of $32,000 in allowance for doubtful accounts. During December, the following transactions occurred: a. Sales on account, $660,000. b. Sales returns and allowances, $9,800. c. Cash collections on accounts receivable from customers, $644,500. d. Write-off of a customer’s account, $9,000. On December 31, 20X6, Elam decided that the allowance account balance should be adjusted to $48,700 to reflect the net realizable value of receivables. Required 1. Prepare journal entries for items a through d and for the adjusting journal entry to the allowance account. 2. Calculate the balance in accounts receivable and the allowance account at December 31, 20X6. 3. In July, 20X7, the customer in item d paid Elam the amount previously written off. 4. Prepare Elam’s journal entry to record this receipt. 1. A) Accounts Receivable 660,000 Sales revenue 660,000 B) Sales Returns and Allowances 9,800 Accounts Receivable 9,800 C) Cash 644,500 Accounts Receivable 644,500 D) Allowance for doubtful accounts 9,000 Accounts receivable 9000
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E) Bad debt expense 25700 Allowance for Uncollectible Accounts 25700 2. Accounts Receivable= 400,000+660,000-9,800-$641,200-9000=$400,200
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