The following transactions were completed by The Irvine Company during the curre

Question

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31:

Feb. 8 Received 40% of the $17,000 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 $7,405 cash in full payment of Seth’s account. Aug. 13 Wrote off the $6,460 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 $3,940 cash in full payment of the account. Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,095; Bonneville Co., $5,540; Crow Distributors, $9,495; Fiber Optics, $1,035. Dec. 31 Based on an analysis of the $1,782,000 of accounts receivable, it was estimated that $35,640 will be uncollectible. Journalized the adjusting entry.

Explanation / Answer

1) 8-Feb Cash Dr 6800 6800         Accounts receivable Cr 6800 Allowance for uncollectibles Dr 10200            Accounts receivable Cr 10200 ( to write off the balance) 27-May Accounts receivable Dr 7405           Allowance for uncollectibles Cr 7405 Cash Dr 7405         Accounts receivable Cr 7405 13-Aug Allowance for uncollectibles Dr 6460            Accounts receivable Cr 6460 ( to write off the balance) 31-Oct Accounts receivable Dr 3940           Allowance for uncollectibles Cr 3940 Cash Dr 3940         Accounts receivable Cr 3940 31-Dec Allowance for uncollectibles Dr 23165            Accounts receivable Cr 23165 ( to write off the balance) 31-Dec Bad Debts expense Dr 35640             Allowance for uncollectibles Cr 35640 2a&b) Allowance for uncollectibles accounts 42408 To Accounts receivable 10200 1-Jan By balance b/d 25615 42595 To Accounts receivable 6460 27-May By Accounts receivable 7405 42735 To Accounts receivable 23165 31-Oct By Accounts receivable 3940 42735 To balance b/d 32160 31-Dec By Bad debt expense 35025 71985 71985 Bad Debt expense 31-Dec To Allowance for uncollectibles 35025 31-Dec By Balance c/d 35025             Accounts Receivable 1-Jan To balance b/d 1782000 8-Feb By Cash 6800 27-May To allowance for uncollectibles 7405 8-Feb By Allowance for uncollectibles accounts 10200 31-Oct To allowance for uncollectibles 3940 27-May By Cash 7405 13-Aug By Allowance for uncollectibles accounts 6460 31-Oct By Cash 3940 31-Dec By Allowance for uncollectibles accounts 23165 31-Dec By Balance c/d 1735375 1793345 1793345 3) Net balance of account receivable 1735375 4) A) Net sales 17760000 allowance ( 1/4 of 1%) 44400 Bad Debt expense 44400 B) Allowance for uncollectibles accounts 8-Feb To Accounts receivable 10200 1-Jan By balance b/d 25615 13-Aug To Accounts receivable 6460 27-May By Accounts receivable 7405 31-Dec To Accounts receivable 23165 31-Oct By Accounts receivable 3940 31-Dec To balance b/d 41535 31-Dec By Bad debt expense 44400 81360 81360 Balance in allowance account 41535 C)             Accounts Receivable 42370 To balance b/d 1782000 8-Feb By Cash 6800 42517 To allowance for uncollectibles 7405 8-Feb By Allowance for uncollectibles accounts 10200 42674 To allowance for uncollectibles 3940 27-May By Cash 7405 13-Aug By Allowance for uncollectibles accounts 6460 31-Oct By Cash 3940 31-Dec By Allowance for uncollectibles accounts 23165 31-Dec By Balance c/d 1735375 1793345 1793345 Net realizable value of accounts receivable 1735375

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