Activity 2:

Financial Statements
December 31,20x1

Accounts Debit Credit

Accounts Receivable 480,000
Allowance for bad debts 12,000
Sales 2,221,418
Bad debts expense -

4
Customer Account Balance
Boy U. Tang 7,000
Girl Lee Moth 2,000

Requirements:
A. Prepare the Journal entries
B. Determine ending balance A/R and Allowance for bad debts by preparing T-accounts
C. Carrying amount of A/R to be reported in your company year end financial statements

A.
Accounts Debit Credit
Dec-31 1.Accounts Receivable 20,000
Sales 2,000
To record SI #00101

Dec-31 2a. Accounts Receivable 3,000

AFBD 3,000
To reverse previous write off

Dec-31 Cash 3,000

Accounts Receivable 3,000
To record the collection of A/R

Dec-31 b.Cash 25,000

Accounts Receivable 25,000
To record the collection of A/R

Dec-31 c.Accounts Receivable 19,000

Cash 19,000
To record the NSF check

Dec-31 3.Bad debts expense 22,415

 AFBD 22,415
To accrue bad debts for a year

Dec-31 4.AFDB(7,000+2,000) 9,000

Accounts Receivable 9,000
To record the write off acc.
 1 2
Not recorded Bank Statement
12/31/20x1 12/01/20x1-12/31/20x1
SI #00101 20,000
Terms:n30 Date Check no.
Dec-01
3 Dec-13 Cash
Bad debts estimate 1% of credit sales Dec-16 135
All sales during the year were on credit Dec-18 984
Dec-19 136
Dec-21 234
Dec-22 784
Dec-25 0784(NSF)
Dec-28 (DM)

B.
Adjusted balances of A/r and Allowance

Accounts Receivables
Unadjusted 480,000
1 20,000
2a. 3,000

2c. 19,000

Allowance for Bad debts

4 9,000
Adjusted 28,414.88

Kita Face Hardware Store C.

Carrying amount of Receivables
Unadjusted credit sales 2,221,488
Add:SI#00101 20,000 Accounts Receivable
Adjuste credit sales 2,241,488 Allowance for bad debts
multiply by 1% Carrying amount
Bad debts expenses-20x1 22,415
 Debits Credits Balance
920,000
16,000 936,000
13,000 923,000
3,000 926,000
8,000 918,000
25,000 943,000
19,000 962,000
19,000 943,000
2,000 941,000

es of A/r and Allowance

Accounts Receivables

3,000
25,000 2b.

9,000 4
485,000

Allowance for Bad debts

12,000 Unadjusted
3,000 2a.
22,414.88 3

of Receivables
 485,000
-28,414.88
456,585