Uncollectible Accounts

3. Ray’s GamePlace sells all the hottest gear and video games. On January 1, 20X7, Ray’s had the following account balances:

a. During 20X7, Ray’s wrote off $6,000 in uncollectible accounts. Make this journal entry.

b. One account in the amount of $500 that had been written off in (a) above was collected. Make the journal entries to reinstate the account and show its collection.

c. During 20X7, Ray’s made credit sales of $145,000 and collected $115,000 of accounts receivable. Record these journal entries.

d. At the end of the year, Ray’s determines that approximately 7 percent of its ending accounts receivable balance will not be collected. Ray’s uses the percentage of receivables method of calculating bad debts. Make the necessary journal entry.

4. Medwear Corporation is a multinational dealer of uniforms for medical personnel. Medwear is headquartered in a country where dollars are the currency. On March 17, Medwear enters into a transaction to sell uniforms to a hospital in Brussels, Belgium in the amount of 267,000 euros. On this date, the exchange rate was $1.32 for every euro.

a. Record this transaction for Medwear on March 17 assuming that the uniforms are purchased on account.

b. On March 31, Medwear prepares financial statements. On this date, the exchange rate is $1.27 per euro. Record the necessary journal entry for Medwear on this date.