https// Add, or Drop Classes Current assets 482,000 accounts of $40,000 During 2

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https// Add, or Drop Classes Current assets 482,000 accounts of $40,000 During 2018, creant caies were $1.800,000, cash collections trom customers $1680,000, and $45000 In accourts recelvabie were writen oft in addition, $4,000 was coectea om a customer whose account was witten of n 2017. An aging of accounts rocevabie at December 31, 2018, reveals the fosowing: Percentage of Year-End Percent in Group Rge Group 0-60 day 61-90 days 91-120 days Over 120 days 603 10 20 10 45 1 Prepare summary journal entries to account for the 2018 wre-oms and tne colection of tne recevabie preloupy wrten ot 2 Prepare the year-eno suating entry for bad deots according to each of tne tomowing shuation ?eac oeotexpense ecinated to be creat sales for the year b. Bad deot expense is estomated by computing net realizable vatue of the recelvables. Tne anovance for uncollectible accounts is estmated to be so% or the year ng Darance raccours receivable c Bad oeot expense ts esomatea by compuaing net realizable value of the recelvabies. The allowance for uncoirecibie accounts determinea by an aging of accounts recevabe 3. For snuations (8c in requirement 2 spove. wnat would be the net amount or accounts receivable reported in the 201e basance sheet Complete this question by entering your answers in the tabs below.

Explanation / Answer

Answers

Accounts Receivables

Allowance for Uncollectible accounts

Beginning Balances

$                           522,000.00 DEBIT

$               40,000.00 CREDIT

Effect of 2018 Transactions:

Credit Sale

$                       1,800,000.00

Cash collected

$                     (1,880,000.00)

Written off account

$                           (45,000.00)

$             (45,000.00)

Reinstating written off account

$                               4,000.00

$                 4,000.00

Cash collected from reinstated account

$                             (4,000.00)

Ending (unadjusted) Balance

$                           397,000.00 DEBIT

$               (1,000.00) DEBIT

Date

Accounst title

Debit

Credit

2018

Allowances for uncollectible account

$                             45,000.00

Accounts receivables

$               45,000.00

(Accounts receivables written off during 2018)

2018

Accounts receivables

$                               4,000.00

Allowances for uncollectible account

$                 4,000.00

(account previously written off, now re-instated)

Cash

$                               4,000.00

Accounts receivables

$                 4,000.00

(amount collected from accounts previously written off)

Situation ‘a’

A

Credit Sale during the year 2018

$ 1,800,000.00

B = A x 2%

Amount of Bad Debt expense

$        36,000.00

Date

Accounts title

Debit

Credit

31-Dec-18

Bad Debt Expense

$                             36,000.00

Allowances for uncollectible account

$               36,000.00

Situation ‘b’

A

Year End balance of account receivables (Working #1)

$      397,000.00

B = A x 10%

Adjusted balance that should exist of Allowances account

$        39,700.00 CREDIT balance

C

Unadjusted balance of Allowances account (as computed above in Working #1)

$          1,000.00 DEBIT balance

D = B + C

Bad Debt Expense will be

$        40,700.00

Date

Account title

Debit

Credit

31-Dec-18

Bad Debt Expense

$                             40,700.00

Allowances for uncollectible account

$               40,700.00

Situation 3

A

Year End balance of account receivables (Working #1)

$      397,000.00

B = as computed 'total' in Aging Schedule

Adjusted balance that should exist of Allowances account

$        44,464.00 CREDIT balance

C

Unadjusted balance of Allowances account (as computed above in Working #1)

$          1,000.00 DEBIT balance

D = B + C

Bad Debt Expense will be

$        45,464.00

Date

Account title

Debit

Credit

31-Dec-18

Bad Debt Expense

$                             45,464.00

Allowances for uncollectible account

$               45,464.00

Situation no.

Accounts receivables (Gross) Balance

Adjusted Allowances for Uncollectible Account

Net Realizable Value of Accounts receivables

[A]

[B]

[Answer = A – B]

a.

$                           397,000.00

$               35,000.00

$                   362,000.00

b.

$                           397,000.00

$               39,700.00

$                   357,300.00

c.

$                          397,000.00

$               44,464.00

$                   352,536.00

Accounts Receivables

Allowance for Uncollectible accounts

Beginning Balances

$                           522,000.00 DEBIT

$               40,000.00 CREDIT

Effect of 2018 Transactions:

Credit Sale

$                       1,800,000.00

Cash collected

$                     (1,880,000.00)

Written off account

$                           (45,000.00)

$             (45,000.00)

Reinstating written off account

$                               4,000.00

$                 4,000.00

Cash collected from reinstated account

$                             (4,000.00)

Ending (unadjusted) Balance

$                           397,000.00 DEBIT

$               (1,000.00) DEBIT

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