The accounts receivable balance for Renue Spa at December 31, 2015, was $85,000.

Question

The accounts receivable balance for Renue Spa at December 31, 2015, was $85,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,300. During 2016, $2,700 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $180 of receivables that had been written off in a previous accounting period. Services provided on account during 2016 were $220,000, and cash collections from receivables were $222,018. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.

a. Record the transactions in general journal form and post to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Based on the preceding information, compute (after year-end adjustment):

(1) Balance of allowance for doubtful accounts at December 31, 2016.

(2) Balance of accounts receivable at December 31, 2016.

(3) Net realizable value of accounts receivable at December 31, 2016.

Explanation / Answer

Req a: Journal Entries Date Accounts title and explanations Debit $ Credit $ a. Allowance for uncollectible Accounts Dr. 2,700     Accounts receivable 2700 b. Accounts receivable Dr. 180 Allowance for uncollectible accounts 180 Cash Account Dr. 180      Accounts receivable 180 c. Accounts receivable Dr. 220,000     Service revenue Account 220,000 d. Cash Account Dr. 222,018     Accounts receivable 222,018 e. Bad debts expense Account (220,000*1%) 2200       Allowance for uncollectible accounts 2,200 Req b: Balance in accounts: Allowance for Uncollectible accounts: Beginning balance in Allowance: 2300 Add: Amount reinstated 180 Add: bad debts expense 2200 Less: Amount written off 2700 Ending balance in Allowance account 1980 Accounts receivable: Beginning balance in Accounts receivable 85,000 Add: Service revenue 220000 Less: Cash collected -222018 Less: Amount written off -2700 Ending balance in Accounts receivable(Gross) 80282 Net realizable value of AR: Accounts receivable(Gross) 80282 Less: Allowance for uncollectible accounts 1980 Accounts receivable (Net) 78302

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