47
Chapter 2
Accounting for Receivables
AP-9A (
2
3
)
During 2016, Jaime Company made total credit sales of $500,000, of which $25,000 was owed
by customers at year-end. On the basis of historical sales, 1% of sales will be uncollectible. Jaime
Company uses the allowance method to account for uncollectible receivables, and uses an
income statement approach to estimate the amount of receivables that will not be collected.
Required
a) Prepare the journal entry on December 31, 2016 to account for the amount deemed
uncollectible.
Date
Account Title and Explanation
Debit
Credit
b) On January 20, 2017, Mrs. L. Green, who owes the company $500, informs Jaime Corporation
that she will be unable to pay the amount. Prepare the necessary journal entry.
Date
Account Title and Explanation
Debit
Credit
c) On February 14, 2017, Mrs. L. Green wins a lottery and decides to repay the full amount owing
to Jaime Corporation. Prepare the necessary journal entries.
Date
Account Title and Explanation
Debit
Credit
