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18 June, 22:18

May 24 Sold merchandise on account to Old Town Cafe $18,450. The cost of goods sold was $11,000. Sept. 30 Received $6,000 from Old Town Cafe and wrote off the remainder owed on the sale of May 24 as uncollectible. Dec. 7 Reinstated the account of Old Town Cafe that had been written off on September 30 and received $12,450 cash in full payment. Journalize the above transactions in the accounts of Zippy Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables. Refer to the Chart of Accounts for exact wording of account titles.

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  1. 18 June, 22:30
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    Answer and Explanation:

    Journal entries

    May 24

    Dr Account Receivable Old Town Cafe $18,450

    Cr Sales $18,450

    To record sales on merchandise on account

    May 24,

    Dr Cost of merchandise sold $11,000

    Cr Merchandise inventory $11,000

    To record the cost of goods sold

    Sept 30

    Dr Cash $6,000

    Dr Allowance for doubtful accounts $12,450

    Cr Account Receivable Old Town Cafe $18,450

    To record cash collection written off uncollectible account receivable

    Written off uncollectible account receivable

    $12,450 ($18,450-$6,000)
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