Reference no: EM132766607

Question - Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.

Year 1

1. Sold $1,345,300 of merchandise (that had cost $980,000) on credit, terms n/30.

2. Wrote off $18,400 of uncollectible accounts receivable.

3. Received $668,100 cash in payment of accounts receivable.

4. In adjusting the accounts on December 31, the company estimated that 1.70% of accounts receivable would be uncollectible.

Year 2

1. Sold $1,594,400 of merchandise (that had cost $1,300,600) on credit, terms n/30.

2. Wrote off $28,200 of uncollectible accounts receivable.

3. Received $1,209,000 cash in payment of accounts receivable.

4. In adjusting the accounts on December 31, the company estimated that 1.70% of accounts receivable would be uncollectible.

Required - Prepare journal entries to record Liang's Year 1 and Year 2 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.)