Question

on june 30, premier party planners had a $35,000 balance in accounts receivable and a $2,752 credit balance in allowance for bad debts. during july, premier made credit sales of $193,000. july collections on account were $164,000, and write - offs of uncollectible receivables totaled $2,870. bad debt expense is estimated as 3% of credit sales. no sales returns are expected. ignore cost of goods sold.
read the requirements.
requirement 1. journalize sales, collections, write - offs of uncollectibles, and bad debt expense by the allowance method during july. explanations are not required. (record debits first, then credits. exclude explanations from any journal entries.)
(a) begin by recording the journal entry for july sales.

Explanation:

Step1: Record credit sales

When a company makes credit sales, it debits Accounts Receivable (to increase the asset) and credits Sales Revenue (to recognize the revenue). The amount of credit sales is $193,000.
Debit: Accounts Receivable $193,000
Credit: Sales Revenue $193,000

Step2: Record collections on account

When collections are made on account, it means the company is receiving cash (increasing the Cash asset) and reducing the Accounts Receivable. The amount of collections is $164,000.
Debit: Cash $164,000
Credit: Accounts Receivable $164,000

Step3: Record write - offs of uncollectible receivables

When writing off uncollectible receivables, we debit Allowance for Bad Debts (to reduce the contra - asset account) and credit Accounts Receivable (to remove the uncollectible amount from the asset account). The write - off amount is $2,870.
Debit: Allowance for Bad Debts $2,870
Credit: Accounts Receivable $2,870

Step4: Record bad debt expense

Bad debt expense is estimated as 3% of credit sales. Credit sales are $193,000. So, bad debt expense = $193,000×0.03 = $5,790. We debit Bad Debt Expense (to recognize the expense) and credit Allowance for Bad Debts (to increase the contra - asset account).
Debit: Bad Debt Expense $5,790
Credit: Allowance for Bad Debts $5,790

Answer:

Date	Accounts	Debit	Credit
	Sales Revenue		$193,000
July	Cash	$164,000
	Accounts Receivable		$164,000
July	Allowance for Bad Debts	$2,870
	Accounts Receivable		$2,870
July	Bad Debt Expense	$5,790
	Allowance for Bad Debts		$5,790