Question

Journalize the following transactions in the accounts of Zippy Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables:

May 24 Sold merchandise on account to Old Town Cafe, $24,450. The cost of goods sold was $14,500.
Sept. 30 Received $9,000 from Old Town Cafe and wrote off the remainder owed on the sale of May 24 as uncollectible.
Dec. 7 Reinstated the account of Old Town Cafe that had been written off on September 30 and received $15,450 cash in full payment.

Answer 1

Answer:

May 24:

Debit Accounts Receivable $24,450

Credit Sales $24,450

Debit Cost of goods sold $14,500

Credit Merchandise $14,500

Sept. 30:

1. Debit Cash $9,000

Credit Accounts Receivable $9,000

2. Debit Allowance for doubtful accounts $15,450

Credit Accounts Receivable $15,450

Dec. 7:

1. Debit Accounts Receivable $15,450

Credit Allowance for doubtful accounts $15,450

2. Debit Cash $15,450

Credit Accounts Receivable $15,450

Explanation:

May 24:

Debit Accounts Receivable $24,450

Credit Sales $24,450

Debit Cost of goods sold $14,500

Credit Merchandise $14,500

Sept. 30: Zippy Interiors Company uses the allowance method of accounting for uncollectible receivables:

1. Debit Cash $9,000

Credit Accounts Receivable $9,000

2. Debit Allowance for doubtful accounts $15,450

Credit Accounts Receivable $15,450

Dec. 7:

1. Debit Accounts Receivable $15,450

Credit Allowance for doubtful accounts $15,450

2. Debit Cash $15,450

Credit Accounts Receivable $15,450