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# 4- At the end of its first year of operations- December 31- 2014- Dard.docx

4. At the end of its first year of operations, December 31, 2014, Darden Inc. reported the following information.
What should be the balance in accounts receivable at December 31, 2014, before subtracting the allowance for doubtful accounts?
Solution
Journal Entries :
1) Bad debt expense for 2014 -
Debit Credit
Bad Debt Expense Â Â  Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  \$88800
Allowance for doubtful accountsÂ Â Â Â Â Â Â Â Â Â Â Â Â  Â Â  \$88800
2) Customer accounts written off as uncollectible during 2014 -
Debit Credit
Allowance for doubtful accountsÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  \$66400
Accounts ReceivableÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  \$66400
(\$66400 = \$88800 - \$22400)
Therefore, Balance in accounts receivable at December 31, 2014 before subtracting the allowance for doubtful accounts should be \$963600 - \$66400 = \$897200
.

4. At the end of its first year of operations, December 31, 2014, Darden Inc. reported the following information.
What should be the balance in accounts receivable at December 31, 2014, before subtracting the allowance for doubtful accounts?
Solution
Journal Entries :
1) Bad debt expense for 2014 -
Debit Credit
Bad Debt Expense Â Â  Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  \$88800
Allowance for doubtful accountsÂ Â Â Â Â Â Â Â Â Â Â Â Â  Â Â  \$88800
2) Customer accounts written off as uncollectible during 2014 -
Debit Credit
Allowance for doubtful accountsÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  \$66400
Accounts ReceivableÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  \$66400
(\$66400 = \$88800 - \$22400)
Therefore, Balance in accounts receivable at December 31, 2014 before subtracting the allowance for doubtful accounts should be \$963600 - \$66400 = \$897200
.