The following transactions were completed by The Irvine Company during the current fiscal year ended December 31: 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 Sethâs 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.
The following transactions were completed by The Irvine Company during the current fiscal year ended December 31: 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 Sethâs 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.
Related questions
The following transactions were completed by Daws Company during the current fiscal year ended December 31:
| Jan. 29. | Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt business, and wrote off the remainder as uncollectible. | |
| Apr. 18. | Reinstated the account of Spencer Clark, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,000 cash in full payment of Clark's account. | |
| Aug. 9. | Wrote off the $11,850 balance owed by Iron Horse Co., which has no assets. | |
| Nov. 7. | Reinstated the account of Vinyl Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,000 cash in full payment of the account. | |
| Dec. 31. | Wrote off the following accounts as uncollectible (one entry): Beth Connelly Inc., $12,100; DeVine Co., $8,110; Moser Distributors, $21,950; Oceanic Optics, $10,000. | |
| 31. | Based on an analysis of the $1,450,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry. |
Instructions
Record the January 1 credit balance of $54,200 in a T account for Allowance for Doubtful Accounts.
Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances:
| Allowance for Doubtful Accounts |
| Bad Debt Expense |
Determine the expected net realizable value of the accounts receivable as of December 31.
Check Figure: $1,390,000
Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables the adjusting entry on December 31 had been based on an estimated expense of ½ of 1% of the sales of $13,200,000 for the year, determine the following:
Bad debt expense for the year.
Balance in the allowance account after the adjustment of December 31.
Expected net realizable value of the accounts receivable as of December 31.
The following transactions were completed by Daws Company during the current fiscal year ended December 31:
| Jan. 29. | Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt business, and wrote off the remainder as uncollectible. | |
| Apr. 18. | Reinstated the account of Spencer Clark, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,000 cash in full payment of Clark's account. | |
| Aug. 9. | Wrote off the $11,850 balance owed by Iron Horse Co., which has no assets. | |
| Nov. 7. | Reinstated the account of Vinyl Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,000 cash in full payment of the account. | |
| Dec. 31. | Wrote off the following accounts as uncollectible (one entry): Beth Connelly Inc., $12,100; DeVine Co., $8,110; Moser Distributors, $21,950; Oceanic Optics, $10,000. | |
| 31. | Based on an analysis of the $1,450,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry. |
Instructions
1) Record the January 1 credit balance of $54,200 in a T account for Allowance for Doubtful Accounts.
2) Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances:
| Allowance for Doubtful Accounts |
| Bad Debt Expense |
3) Determine the expected net realizable value of the accounts receivable as of December 31.
4) Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables the adjusting entry on December 31 had been based on an estimated expense of ½ of 1% of the sales of $13,200,000 for the year, determine the following:
Bad debt expense for the year.
Balance in the allowance account after the adjustment of December 31.
Expected net realizable value of the accounts receivable as of December 31.
Entries Related to Uncollectible Accounts
The following transactions were completed by The Spencer Galleryduring the current fiscal year ended December 31: Mar. 15.Reinstated the account of Brad Atwell, which had been written offin the preceding year as uncollectible. Journalized the receipt of$1,650 cash in full payment of Bradâs account. May 20. Wrote offthe $9,450 balance owed by Glory Rigging Co., which is bankrupt.Aug. 13. Received 30% of the $17,000 balance owed by Coastal Co., abankrupt business, and wrote off the remainder as uncollectible.Sept. 2. Reinstated the account of Lorie Kidd, which had beenwritten off two years earlier as uncollectible. Recorded thereceipt of $2,690 cash in full payment. Dec. 31. Wrote off thefollowing accounts as uncollectible (compound entry): Kimbro Co.,$7,110; McHale Co., $2,110; Summit Furniture, $5,430; Wes Riggs,$1,535. Dec. 31. Based on an analysis of the $837,200 of accountsreceivable, it was estimated that $36,400 will be uncollectible.Journalized the adjusting entry.
Required:
1. Record the January 1 credit balance of$34,700 in a T account (below) for Allowance for DoubtfulAccounts.
| 2. a.Journalize the transactions. For acompound transaction, if an amount box does not require an entry,leave it blank. Note: For the December 31 adjusting entry, assumethe $837,200 balance in accounts receivable reflects theadjustments made during the year. 2. b. Post each entry that affects thefollowing T accounts and determine the new balances: 3. Determine the expected net realizable valueof the accounts receivable as of December 31 (after all of theadjustments and the adjusting entry). |
