Question

The following events occur for The Underwood Corporation during 2021 and 2022, its first two years of operations.
June 12, 2021 Provide services to customers on account for $41,000.
September 17, 2021 Receive $25,000 from customers on account.
December 31, 2021 Estimate that 458 of accounts receivable at the end of the year will not be received.
March 4, 2022 Provide services to customers on account for $56,000.
May 20, 2022 Receive $10,000 from customers for services provided in 2021.
July 2, 2022 Write of the remaining amounts owed from services provided in 2021.
October 19, 2022 Receive $ 45,000 from customers for services provided in 2022.
December 31, 2022 Estimate that 45% of accounts receivable at the end of the year will not be received.
Record transactions for each date. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Provide services to customers on account for $35,000.

Answer 1

Answer:

Journal Entries are given below

Explanation:

June 12, 2021  

Provide services to customers on account of $41,000.

                                    DEBIT        CREDIT

Receivable account    $41,000

Services Revenue                          $41,000

September 17, 2021

Receive $25,000 from customers on account.

                                     DEBIT        CREDIT

Cash                           $25,000

Receivable                                    $25,000

December 31, 2021

Estimate that 45% of accounts receivable at the end of the year will not be received.

                                                  DEBIT        CREDIT

Bad debt($16,000x45%)           $7,200

Allowance for doubtful debt                       $7,200

March 4, 2022

Provide services to customers on account for $56,000

                                    DEBIT        CREDIT

Receivable account    $56,000

Services Revenue                          $56,000

May 20, 2022

Receive $10,000 from customers for services provided in 2021.

                                     DEBIT        CREDIT

Cash                          $10,000

Receivable                                     $10,000

July 2, 2022

Write of the remaining amounts owed from services provided in 2021.

Working: $41,000 - $25,000 - $10,000 = $6,000

                                                               DEBIT        CREDIT

Allowance for doubtful debt               $6,000

Account Receivable                                                 $6,000

October 19, 2022

Receive $ 45,000 from customers for services provided in 2022.

                                   DEBIT        CREDIT

Cash                           $45,000

Receivable                                    $45,000

December 31, 2022

Estimate that 45% of accounts receivable at the end of the year will not be received.

                                          DEBIT        CREDIT

Bad debt (w)                       $3,750

Allowance for bad debt                     $3,750

Working:

($56,000 - $45,000) x45% = $4,950

Balance in Allowance account at 31 dec 2021  = 7,200

Bad debt written off                                             = 6,000

Remaining balance                                              = 1,200

Allowance for doubtful debt at 31 dec 2022 = $4,950 - $1,200

Allowance for doubtful debt at 31 dec 2022 = $3,750