The following was taken from the records of Smith Company in the year ending Dec

Question

The following was taken from the records of Smith Company in the year ending December 31, 2014. Journalize the following transactions in an Excel formula for year-end 2014 using the aging method. Assume that the allowance for doubtful accounts has a beginning credit balance of $18,000 on January 1, 2014.

Label the events below as journal entries #1 to #4, along with the dates of the entries:

1.February 20, 2014: Wrote off Jones account: $7,250.

2.May 20, 2014: Received $4,050 as partial payment on the $8,000 account receivable due from Garcia. The remaining amount is believed to be uncollectible and is written off.

3.August 10, 2014: Received $7,250 from Jones on the account written off on February 20, 2014.

4.September 15: Wrote off the individual account receivables for the following customers as payment not expected in future: Tang: $4,400; Mulaka: $2,210; Quan: $1,375.

December 31, 2014: Smith Company prepared the following aging schedule for it accounts receivables:

$160,000 of Accounts Receivable (A/R) are 0-30 days late: 3% probability of not being paid.

$40,000 of A/R are 31-60 days late: 10% probability of not being paid.

$18,000 of A/R are 61-90 days late: 20% probability of not being paid.

$1,500 of A/R are later than 90 days late: 50% probability of not being paid.

Instructions:

Submit the following items in an Excel formula labeling each as 1, 2, 3, and 4:

The four journal entries (1 to 4 above) with a one-sentence description for each

The allowance for doubtful accounts T-account

The journal entry to record bad debt expense

The balance sheet presentation of net realizable value, including gross accounts receivables of $219,500

Explanation / Answer

Journal:

workings:

allowance for doubtful accounts T account:

Balance sheet presentation:

Date Account Debit Credit Feb.20 Allowance for doubtful accounts              7,250 Accounts receivable             7,250 [uncollectible accounts written off] Aug.10 Accounts receivable              7,250 Allowance for doubtful accounts 7250 [Uncollectible accounts written off, now being collected] Aug.10 Cash              7,250 Accounts receivable             7,250 [Uncollectible accounts written off, now being collected] Sep.15 Allowance for doubtful accounts            11,935 Accounts receivable           11,935 [uncollectible accounts written off] Dec.31 Bad debt expense              7,085 Allowance for doubtful accounts             7,085 [Bad debt expense accouted, using aging of debtos method]

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