The following events occur for The Underwood Corporation during 2018 and 2019, i

Question

The following events occur for The Underwood Corporation during 2018 and 2019, its first two years of operations.
  
  

June 12, 2018   Provide services to customers on account for $29,000.
September 17, 2018   Receive $15,000 from customers on account.
December 31, 2018   Estimate that 40% of accounts receivable at the end of the year will not be received.
March 4, 2019   Provide services to customers on account for $44,000.
May 20, 2019   Receive $10,000 from customers for services provided in 2018.
July 2, 2019   Write off the remaining amounts owed from services provided in 2018.
October 19, 2019   Receive $35,000 from customers for services provided in 2019.
December 31, 2019   Estimate that 40% of accounts receivable at the end of the year will not be received.

1. Record transactions for each date.

2. Post transactions to the following accounts: Cash, Accounts Receivable, and Allowance for Uncollectible Accounts.

3. Calculate the net realizable value of accounts receivable at the end of 2018 and 2019.

Explanation / Answer

Journal Entries 12-Jun-18 Account Receivable Dr 29000 To Sale of Services 29000 ( Provide services to customers on account for $29,000) 17-Sep-18 Cash Dr 15000 To Account Receivable 15000 (Being Receive $15,000 from customers on account.) 31-Dec-18 Provision of Bad Debts or P&l A/C Dr 5600 To Allowance for Uncollectible Accounts 5600 (Being 40% of accounts receivable at the end of the year will not be received.) 4-Mar-19 Account Receivable Dr 44000 To Sale of Services 44000 ( Provide services to customers on account for $44000) 20-May-19 Cash Dr 10000 To Account Receivable 10000 (Being Receive $10,000 from customers on account.) 2-Jul-19 Allowance of Uncollectable Accounts Dr 4000 To Account Receivable 4000 (Being Write off the remaining amounts owed from services provided in 2018) 19-Oct-19 Cash Dr 35000 To Account Receivable 35000 (Being Receive $35,000 from customers on account.) 31-Dec-19 Provision of Bad Debts or P&l A/C Dr 2000 To Allowance for Uncollectible Accounts 2000 (Being 40% of accounts receivable at the end of the year will not be received (9000*40%-(5600-4000)) Net Realizable Value For Year 2018 $ Sale 29000 Less :Cash Received -15000 Gross Receivable 14000 Less : Allowance for Uncollectible Accounts -5600 Net Realizable Value as on 31.12.2018 8400 For Year 2019 $ Opening Balance (Gross Receivable) 14000 Sale 44000 Less :Cash Received for year 2018 -10000 Less : Write off -4000 (14000-10000) Less :Cash Received for year 2019 -35000 Gross Receivable 9000 Less : Allowance for Uncollectible Accounts -3600 Net Realizable Value as on 31.12.2019 5400 Cash A/c Debit Credit Date Particulars Amount Date Particulars Amount 17/09/2018 To Account Receivable 15000 31/12/2018 By Balance C/d 15000                        -   Total 15000 Total 15000 1/1/2019 To Balance B/D 15000 20/5/2019 To Account Receivable 10000 19/10/2019 To Account Receivable 35000 31/12/2019 By Balance C/d 60000 Total 60000 Total 60000 Account Receivable A/c Debit Credit Date Particulars Amount Date Particulars Amount 12/6/2018 To Sale 29000 17/09/2018 By Cash 15000 31/12/2018 By Balance C/d 14000                        -   Total 29000 Total 29000 1/1/2019 To Balance B/D 14000 20/5/2019 By Cash 10000 4/3/2019 To Sale 44000 2/7/2019 By Allowance for Uncollectable accounts 4000 19/10/2019 By Cash 35000 31-12-19 By Balance C/d 9000 Total 58000 Total 58000 Allowance for Uncollectible Accounts Debit Credit Date Particulars Amount Date Particulars Amount 31/12/2018 To Balance C/d 5600 31/12/2018 By P& L 5600                        -   Total 5600 Total 5600 2/7/2019 To Account Receivable 4000 1/1/2019 By Balance B/D 5600 31/12/2019 To Balance C/d 3600 31-12-19 By P& L 2000 Total 7600 Total 7600

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