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P8-2B
At December 31, 2013, Dustin Company reported this information on its balance sheet.
Account receivable
$960,000
Less: Allowance for doubtful accounts
78,000
During 2014, the company had the following transactions related to receivables.
1) Sales on account
$3,600,000
2)
Sales returns and allowances
150,000
3)
Collections of accounts receivable
3,100,000
4) Write-offs of accounts receivable deemed uncollectible
92,000
5) Recovery of bad debts previously written off as uncollectible
28,000
Instructions
(a) Prepare the journal entries to record each of these five transactions. Assume that no cash
discounts were taken on the collections of accounts receivable. (Omit cost of goods sold
entries)
(b) Enter the January 1, 2014, balances in Accounts Receivable and Allowance for Doubtful
Accounts, post the entries to the two accounts (use T-accounts), and determine the
balances.
(c) Prepare the journal entry to record bad debt expense for 2014, assuming that aging the
accounts receivable indicates that expected bad debts are $140,000.
(d) Compute the accounts receivable turnover and average collection period.

Top Answer

please refer to pictures... View the full answer

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General Journal
Debit
Credit
1) Accounts receivable
$3.600.000
Sales
$3.600.000
(To record sales on account)
Sales returns and allowances
$150.000
Accounts receivable
$150.000
(To record sales...

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