Assume that all of Thurmond Company’s sales are credit sales. It has been the practice of Thurmond Company to provide for uncollectible accounts expense at the rate of one-half of one percent of net credit sales. For the year 20X1 the company had net credit sales of $2,021,000 and the Allowance for Doubtful Accounts account had a credit balance, before adjustments, of $630 as of December 31, 20X1. During 20X2, the following selected transactions occurred:
Jan. 20 The account of H. Scott, a deceased customer who owed $325, was determined to be uncollectible and was therefore written off.
Mar. 16 Informed that A. Nettles, a customer, had been declared bankrupt. His
account for $898 was written off.
Apr. 23 The $906 account of J. Kenney & Sons was written off as uncollectible.
Aug. 3 Wrote off as uncollectible the $750 account of Clarke Company.
Oct. 20 Wrote off as uncollectible the $1,130 account of G. Michael Associates.
Oct. 27 Received a check for $325 from the estate of H. Scott. This amount had been
written off on January 20 of the current year.
Dec. 20 Cater Company paid $7,000 of the $7,500 it owed Thurmond Company.
Since Cater Company was going out of business, the $500 balance it still
owed was deemed uncollectible and written off.
REQUIRED: Prepare journal entries for the December 31, 20X1, and the seven
20X2 transactions on the work sheets provided at the back of this unit. Then
answer questions 8 and 9 on the answer sheet. T-accounts are also provided for
your use in answering these questions.
8. Which one of the following entries should have been made on December 31, 20X1?
