Monique’s Trading Company balance sheet at December 31, 2016, reported the follo

Question

Monique’s Trading Company balance sheet at December 31, 2016, reported the following:

Accounts receivable...........................................$1,000,000

Allowance for uncollectible accounts...................$33,330

The following are the transactions to be taken into consideration for 2017:

a.    Total credit sales for 2017 were $2,400,000.

b.    2% of sales were estimated to be uncollectible.

c.    The company received cash payments on account during 2017 for $900,000

d.   Accounts receivable identified to be uncollectible totaled $64,000.

e.   December 31, 2017, aging of receivables indicates that $72,000 of the

      receivables are uncollectible.

Requirements:

1. What was the net realizable value of the receivables as at December 31,2016

2. Prepare the journal entries for the company’s 2017 transactions.

3. Prepare the Accounts receivable and the Allowance for uncollectible

accounts T-accounts based on the information presented above. (Hint!!! The opening balances and the transactions from the journal entries must be recorded in their respective accounts)

4. What is the net realizable value of receivables as at December 31, 2017? (show workings)

Explanation / Answer

1. What was the net realizable value of the receivables as at December 31,2016

2. Prepare the journal entries for the company’s 2017 transactions.

3. Prepare the Accounts receivable and the Allowance for uncollectible

accounts T-accounts based on the information presented above.

4. What is the net realizable value of receivables as at December 31, 2017? (show workings)

Accounts receivable 10,00,000 Allowance for uncollectible accounts 33330 net realizable value 9,66,670

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