Prepare general journal entries to record the following transactions for the Harris
Company. (The company uses the balance sheet approach for recording bad
debts expense.)
2010
Dec. 31 Recorded Bad Debts Expense, $800
2011
Jan. 3 Wrote off Jal’s account as uncollectible, $60
Mar. 4 Wrote off Hall’s account as uncollectible, $75
Jul. 5 Recovered $45 from Hall
Aug. 19 Wrote off M. Wilson’s account as uncollectible, $100
Nov. 7 Recovered $25 from Jal
To record the transactions for the Harris Company, you need to understand the basic principles of journal entries. Journal entries use a double-entry bookkeeping system, where every transaction involves at least two accounts. One account is debited, and the other is credited. Here's how you can prepare the journal entries for the given transactions:
1. Dec. 31, 2010: Recorded Bad Debts Expense, $800
- Debit: Bad Debts Expense $800
- Credit: Allowance for Doubtful Accounts $800
2. Jan. 3, 2011: Wrote off Jal’s account as uncollectible, $60
- Debit: Allowance for Doubtful Accounts $60
- Credit: Accounts Receivable - Jal $60
3. Mar. 4, 2011: Wrote off Hall’s account as uncollectible, $75
- Debit: Allowance for Doubtful Accounts $75
- Credit: Accounts Receivable - Hall $75
4. Jul. 5, 2011: Recovered $45 from Hall
- Debit: Accounts Receivable - Hall $45
- Credit: Allowance for Doubtful Accounts $45
5. Aug. 19, 2011: Wrote off M. Wilson’s account as uncollectible, $100
- Debit: Allowance for Doubtful Accounts $100
- Credit: Accounts Receivable - M. Wilson $100
6. Nov. 7, 2011: Recovered $25 from Jal
- Debit: Accounts Receivable - Jal $25
- Credit: Allowance for Doubtful Accounts $25
These journal entries reflect the impact of each transaction on the accounts involved. The "Bad Debts Expense" account is used to record the estimated losses from uncollectible accounts, while the "Allowance for Doubtful Accounts" account represents the estimated balance of uncollectible accounts. The "Accounts Receivable" accounts are used to record the amounts owed by customers.