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The balance sheet of Concord Company at December 31, 2016, includes the following.

Notes receivable $37,800
Accounts receivable 189,600 Less:
Allowance for doubtful accounts 20,400 $207,000

Transactions in 2017 include the following.

1. Accounts receivable of $140,500 were collected including accounts of $65,800 on which 3% sales discounts were allowed.

2. $5,500 was received in payment of an account which was written off the books as worthless in 2016.

3. Customer accounts of $20,600 were written off during the year.

4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $23,100. This estimate is based on an analysis of aged accounts receivable.

-Prepare all journal entries necessary to reflect the transactions above.

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Answer and Explanation:

The Journal Entry is shown below:-

1. Cash Dr, $138,526  

Discount on sales Dr, $1,974

$65,800 × 3%

           To account receivable $140,500

(Being cash received on accounts receivable is recorded)

2. Accounts receivable Dr, $5,500  

         To Allowance for doubtful debts $5,500

{Being cash received against accounts receivable written off is recorded)

3. Allowance for doubtful debts Dr, $20,600  

      To Accounts receivable  $20,600

(Being accounts receivable written off is recorded)

4. Bad debts Dr, $17,800  

     To Allowance for doubtful debts $17,800

(Being Allowance for doubtful debts created for bad debts is recorded)

Working Note for 4th entry

Allowance for doubtful debts

Particulars                           Amount        Particulars                Amount

To accounts receivable     $20,600       By balance b/d 20,400

By account receivable        $5500

to balance                             $23,100     By bad debts       $17,800

Total                               $43,700     Total                      $43,700

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