Question - Johnson Co. began operations on January 1, 2016. During the next 2 years, they completed a number of transactions involving credit sales, accounts receivable collections and bad debts.
The transactions are summarized as follows (assume a perpetual inventory system): 2016
January 26 June 13 December 19 December 31 2017
March 26
August 15
November 22 December 31
Required:
Merchandise that cost $608,000 was sold for $776,000 under credit terms of n/30.
Wrote off uncollectible accounts receivable in the amount of $16,000.
Received cash of $520,000 in payment of outstanding accounts receivable.
In adjusting the accounts on December 31, concluded that 2.0% of the outstanding accounts receivable would become uncollectible.
Johnson Co. sold merchandise for $1,144,000 under credit terms of n/60. The merchandise had cost $896,000.
Wrote off uncollectible accounts receivable in the amount of $24,000.
Payments of outstanding accounts received totaled $560,000. While accounts were being adjusted on December 31, it was concluded that 2.0% of the outstanding accounts receivable would become uncollectible.
Prepare journal entries to record Johnson's 2016 and 2017 summarized transactions, and the adjusting entries to record bad debt expense at the end of each year (December 31).