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The adjusting entry
Maps and Globes, Inc. is a manufacturer that makes all sales on 30-day credit terms. Annual sales are approximately $25 million. At the end of 2000, accounts receivable were presented in the company balance sheet as follows:
Accounts receivable from customers ………$2 350 000 Less: Allowance for doubtful accounts ………70 000 During 2001, $740 000 in accounts receivable were written off as uncollectible. Of these accounts written off, receivables totaling $24 000 were unexpectedly collected. At the end of 2001, an aging of accounts receivable indicated a need for an $80 000 allowance to cover possible failure to collect the accounts currently outstanding. Maps & Globes makes adjusting entries in its accounting records only at year-end. Monthly and quarterly financial statements are prepared from work sheets, without any adjusting or closing entries actually being entered in the accounting records. (In short, you may assume the company adjusts its accounts only at years end.) Required: Prepare the following in the form of general journal entries: 1. One entry to summarize all accounts written off against the allowance for doubtful Accounts during 2001. 2. Entries to record the $24 000 in accounts receivables that were unexpectedly collected. 3. The adjusting entry required at December 31, 2001, to increase the allowance for doubtful accounts to $80 000. |
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