The following was taken from the records of Smith Company in the year ending December 31, 2014. Journalize the following transactions in an Excel spreadsheet for year-end 2014 using the aging method. Assume that the allowance for doubtful accounts has a beginning credit balance of $18,000 on January 1, 2014.
The following was taken from the records of Smith Company in the year ending December 31, 2014. Journalize the following transactions in an Excel spreadsheet for year-end 2014 using the aging method. Assume that the allowance for doubtful accounts has a beginning credit balance of $18,000 on January 1, 2014.
Assignment Template
Label the events below as journal entries #1 to #4, along with the dates of the entries:
1.February 20, 2014: Wrote off Jones account: $7,250.
2.May 20, 2014: Received $4,050 as partial payment on the $8,000 account receivable due from Garcia.
3.August 10, 2014: Received $7,250 from Jones on the account written off on February 20, 2014.
4.September 15: Wrote off the individual account receivables for the following customers as payment not expected in future: Tang: $4,400; Mulaka: $2,210; Quan: $1,375.
December 31, 2014: Smith Company prepared the following aging schedule for it accounts receivables:
•$160,000 of Accounts Receivable (A/R) are 0-30 days late: 3% probability of not being paid.
•$40,000 of A/R are 31-60 days late: 10% probability of not being paid.
•$18,000 of A/R are 61-90 days late: 20% probability of not being paid.
•$1,500 of A/R are later than 90 days late: 50% probability of not being paid.
Instructions:
Submit the following items in an Excel spreadsheet, labeling each as 1, 2, 3, and 4:
1.The four journal entries (1 to 4 above) with a one-sentence description for each
2.The allowance for doubtful accounts T-account
3.The journal entry to record bad debt expense
4.The balance sheet presentation of net realizable value, including gross accounts receivables of $219,500
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To journalize the transactions using the aging method in an Excel spreadsheet for year-end 2014, follow these steps:
1. Create an Excel spreadsheet with the following columns: Date, Account, Account Description, Debit, Credit.
2. In the first row, enter the column headers mentioned above.
3. Begin by recording the beginning balance of the allowance for doubtful accounts. In the first row of the Date column, enter "01/01/2014". In the Account column, enter "Allowance for Doubtful Accounts". In the Account Description column, enter a brief description like "Beginning balance". In the Credit column, enter "$18,000" to represent the beginning credit balance.
4. Proceed to record each transaction using the aging method. For example, if there is a transaction where a customer's account is determined to be uncollectible and is written off, you would record the date of the transaction, the customer's account as the Account, a description of the transaction in the Account Description column, and the appropriate debit and credit amounts in the Debit and Credit columns, respectively.
5. Follow the same process for all other transactions based on the information available. Be sure to include the transaction details such as dates, accounts, descriptions, and debit/credit amounts accurately.
6. Once all the transactions have been recorded, you can use formulas in Excel to calculate the ending credit balance of the allowance for doubtful accounts. Add a row below the last transaction to calculate the balance. In the Account column, enter "Allowance for Doubtful Accounts". In the Account Description column, enter "Ending balance". In the Credit column, add a formula that sums up the credits to calculate the ending credit balance.
7. Format the spreadsheet as desired, and make sure all the figures and formulas are accurate.
By following these steps, you should be able to accurately journalize the given transactions using the aging method in an Excel spreadsheet for year-end 2014.