The following transactions were completed by The Irvine Company during the curre

Question

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31:

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Chart of Accounts

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T Accounts

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Journal

2. A. Journalize the transactions. For the December 31 adjusting entry, assume the $1,759,500 balance in accounts receivable reflects the adjustments made during the year. Refer to the chart of accounts for a listing of the account titles the company uses.

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JOURNAL

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Feb. 8 Received 45% of the $18,700 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible. May 27 Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,270 cash in full payment of Seth’s account. Aug. 13 Wrote off the $6,360 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 as uncollectible. Journalized the receipt of $3,975 cash in full payment of the account. Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,265; Bonneville Co., $5,595; Crow Distributors, $9,305; Fiber Optics, $1,150. Dec. 31 Based on an analysis of the $1,759,500 of accounts receivable, it was estimated that $35,190 will be uncollectible. Journalized the adjusting entry.

Explanation / Answer

T accounts

2a) Journal Date Particulars Debit Credit 8-Feb Cash 8415 Allowance for Doubtful Accounts 10285           Accounts Receivable - Decoy Co.   18700 Amount Written off 27-Mar Accounts Receivable - Seth Nelsen 7270              Allownace for Doubtful Accounts 7270 Amount Re instated Cash 7270           Accounts Receivable - Seth Nelsen 7270 Amount   recovered 13-Aug Allowance for Doubtful Accounts 6360         Accounts Receivable - Kat Tricks Co. 6360 Amount written off 31-Oct Accounts Receivable - Crawford Co. 3975              Allownace for Doubtful Accounts 3975 Amount Re instated Cash 3975           Accounts Receivable -Crwaford co. 3975 Amount   recovered 31-Dec Allowance for Doubtful Accounts 23315.00         Accounts Receivable - Newbauer Co. 7265.00         Accounts Receivable - Bonneville co. 5595.00         Accounts Receivable - Crow Distributors 9305.00         Accounts Receivable - Fiber Optics 1150.00 Amount written off 31-Dec Bad Debt Expense 38220              Allownace for Doubtful Accounts 38220 Bad debt expense for current year recorded We observe that Allowance account has opening balance = 25685 Amounts reinstated = 11245 ( Total) Sub Total = 36930 Less Debts written off = 39960 Balance in Allownace account = 3030 Debit But as closing balance we need 35190 credit So total amount to be recorded as bad debt this year will be = 35190 + 3030,, = 38220

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