$1.200,000 Allowance for doubtful accounts Accounts recervable, net 1,211,50o em
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$1.200,000 Allowance for doubtful accounts Accounts recervable, net 1,211,50o ems: Series A Obj. 4 PR 8-1A Allowance method entries The following transactions were completed by Irvine Company during the current fiscal year 749,300 ended December 31 Feb. 8, Received 40% of the S1 8,000 balance owed by Decoy Co, a bankrupt business, and wrote off the May 27. Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible Aug 13. Wrote off the $6,400 balance owed by Kat Tracks Co, which has no assets Oct. 31. Reinstated the account of Crawford Co, which had been written off in the preceding year a:s Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Newbauer Co, $7.190, Bonneville remainder as uncollectible RAL LEDGERMay Journalized the receipt of $7,350 cash in full payment of Seth's account. uncollectible. Journalized the receipt of $3,880 cash in full payment of the account. Co., $5,500; Crow Distributors, $9,400; Fiber Optics, $1,110. uncollectible. Journalized the adjusting entry 31. Based on an analysis of the 51,785,oo0 of accounts receivable, it was estimated that $35,700 will be Instructions 1. Record the January I credit balance of s26,000 in a T account for Allowance for Doubtfi 2. Journalize the transactions. Post cach entry that affects the following selected T accoun Accounts. and determine the new balances: Allowance for Doubtful Accounts Bad Debt Expense 3. Determine the expected net realizable value of the accounts receivable as 4. Assuming that instead of basing the provision for uncollectible accounts on an analysis receivables, the adjusting entry on December 31 had been based on an estimated expe of of i% of the sales of S18,200,000 for the year, determine the following: A. Bad debt expense for the year B. Balance in the allowance account after the adjustment of December 31. C. Expected net realizable value of the accounts receivable as of December 31.Explanation / Answer
Answer 2. A. Journal Entry Date Particulars Dr. Amt Cr.Amt Feb-08 Cash ($18000* 40%) 7,200 Allowance for Doubtful Accounts 10,800 Accounts Receivables 18,000 (To record the amt. recd and balance w/o) May-27 Accounts Receivables 7,350 Allowance for Doubtful Debts 7,350 (To record the amt. reinstated w/o earlier) May-27 Cash 7,350 Accounts Receivables 7,350 (To record the amount received) Aug-13 Allowance for Doubtful Accounts 6,400 Accounts Receivables 6,400 (To record the amount writte off) Oct-31 Accounts Receivables 3,880 Allowance for Doubtful Debts 3,880 (To record the amt. reinstated w/o earlier) Oct-31 Cash 3,880 Accounts Receivables 3,880 (To record the amount received) Dec-31 Allowance for Doubtful Accounts 23,200 Accounts Receivables 23,200 (To record the amount written off) Dec-31 Bad Debts 38,870 Allowance for Doubtful Debts 38,870 (To record the bad debt expenses) Answer 1 & 2. B. Allowance for Doubtful Accounts Date Particulars Amt Date Particulars Amt Feb-08 To Accounts Receivables 10,800 Jan-01 By Balance b/f 26,000 Aug-13 To Accounts Receivables 6,400 May-27 By Accounts Receivables 7,350 Dec-31 To Accounts Receivables 23,200 Oct-31 By Accounts Receivables 3,880 Dec-31 By Bad debts (Bal. fig) 38,870 Dec-31 To Balance C/f 35,700 76,100 76,100 Bad debts Date Particulars Amt Date Particulars Amt Dec-31 By Allowance for Doubtful A/c 38,870 Dec-31 By income Statement 38,870 38,870 38,870 Answer 3. Net Realizable Value of Accounts receivables as on dec-31 = $1,785,000 - $35700 = $1,749,300 Answer 4. Allowance for Doubtful Accounts Date Particulars Amt Date Particulars Amt Feb-08 To Accounts Receivables 10,800 Jan-01 By Balance b/f 26,000 Aug-13 To Accounts Receivables 6,400 May-27 By Accounts Receivables 7,350 Dec-31 To Accounts Receivables 23,200 Oct-31 By Accounts Receivables 3,880 Dec-31 By Bad debts 45,500 Dec-31 To Balance C/f 42,330 (18,200,000 X 1%) X 1/4 82,730 82,730 182,000.00 455 Bad debts Date Particulars Amt Date Particulars Amt Dec-31 By Allowance for Doubtful A/c 45,500 Dec-31 By income Statement 45,500 45,500 45,500 a. Bad debts Exp. For the Year = ($18,200,000 X 1%) X 1/4 = $45,500 b. Balance in Allowance account = $42,330 c. Net relizable Value of Accounts Receivables = 1,785,000 - 42,330 = $1,742,670
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