Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 35

Liang Company began operations on January 1, 2014. 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:

2015
e. Sold $1,525,634 of merchandise (that had cost $1,250,000) on credit, terms n/30.
f. Wrote off $27,800 of uncollectible accounts receivable.
g. Received $1,204,600 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable will be uncollectible.
Required
Prepare journal entries to record Liang's 2014 and 2015 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. Round amounts to the nearest dollar.)