The following information is available at December 31st for Byron Inc.: Instruct

Question

The following information is available at December 31st for Byron Inc.:

Instructions

Calculate the estimated value of uncollectible accounts and the net realizable value of Byron’s accounts receivable at December 31st.

Prepare the adjusting journal entry at December 31st to record bad debt expense given that the Allowance for Doubtful Accounts has a credit balance of $2,000 prior to any adjustments.

Prepare the required journal entry if Byron Inc. learns that $2,500 from Galt Supplies Ltd. Is not collectible.

Prepare the required journal entry if Bryon Inc. subsequently collects the $2,500 from Galt Supplies Ltd. that was previously written off.

Number of Days Outstanding Accounts Receivable Estimated Percentage Uncollectable 1-30 days $85,000 5% 31-60 days 25,000 15% 61 - 90 days 10,000 25% Total 120,000

Explanation / Answer

Calculate estimated value of uncollectible accounts :

Net realizable value = 120000-10500 = $109500

b) Adjusting entry :

c) Journal entry :

d) Journal entry :

Days Account receivable Estimated Percentage Uncollectable Estimated Amount Uncollectable 1-30 days 85000 5% 4250 31-60 days 25000 15% 3750 61-90 days 10000 25% 2500 Total 120000 10500

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