Reference no: EM132522822
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 $1,351,000 of merchandise (that had cost $979,900) on credit, terms n/30.
2. Wrote off $19,600 of uncollectible accounts receivable.
3. Received $674,100 cash in payment of accounts receivable.
4. In adjusting the accounts on December 31, the company estimated that 1.90% of accounts receivable would be uncollectible.
Year 2 -
1. Sold $1,576,800 of merchandise (that had cost $1,285,700) on credit, terms n/30.
2. Wrote off $30,800 of uncollectible accounts receivable.
3. Received $1,225,900 cash in payment of accounts receivable.
4. In adjusting the accounts on December 31, the company estimated that 1.90% 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.