8 21 Online teaching Entries related to al Final Q The foilowing transactions we

Question

8 21 Online teaching Entries related to al Final Q The foilowing transactions were completed by The Trvine Company during the current fiscal year ended December 31 Feb. 8 Recerved 40% of the $18,000 balance owed by Decoy Co., a benkrupt bus ness, and wrote off the remainder as uncollectibie. May 27 Reinstated the account of Seth Nelsen, which had been written offfin the preceding year as uncollectible Journalized the receipt of $7,3s0 cash in full payment of Seth's account Aug. 13 Wrote off the $6,400 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 uncolilectible. Journalized the receipt of $3,880 cash in full payment of the account Wrote off the following accounts as uncollectible (compound entry): Newbauer Co $7,190; Bonneville Co, $5,500; Crow Distributors, $9,400; Fiber Optics, $1,110 Dec. 31 Dec 31 Based on an analysis of the $1,785,000 of accounts receivable, iz was estimated that 35,700 will be uncolectible. Journalized the adjusting entry. Required: I. Record the January 1 credit bolance of $26,000 in a T account for Allowance for Doubtful Accounts

Explanation / Answer

2. Journal entries:

Date

Account title

Debit

Credit

Feb 8

Cash (18,000*40%)
Allowances for doubtful accounts
      Accounts receivable

7,200
10,800

18,000

May 27

Accounts Receivable
             Allowance for Doubtful Accounts

7,350

7,350

Aug 13

Allowance for Doubtful Accounts
                     Accounts Receivable

6,400

6,400

Oct 31

Accounts Receivable
             Allowance for Doubtful Accounts

3,880

3,880

Cash
     Accounts receivable

3,880

3,880

Dec 31

Allowance for Doubtful Accounts
           Accounts Receivable, Newbauer Co.,
          Accounts Receivable, Bonneville Co.,
         Accounts Receivable, Crow distributors,
          Accounts Receivable, Fiber Optics.

23,200

7,190
5,500
9,400
1,110

Dec 31

Bad Debt Expense
                Allowance for Doubtful Accounts
(35,700 + 3,170)note

38,870

38,870

Note: Adjustment for allowance for doubtful accounts:

Allowance for Doubtful Accounts

         26,000

Opening balance

8-Feb

         10,800

            7,350

27-May

13-Aug

            6,400

            3,880

31-Oct

31-Dec

         23,200

Total

         40,400

         37,230

Debit balance

3,170

           

3. Calculating the expected net realizable value of the accounts receivable as of December 31:
Accounts receivable - uncollected amount
= 1,785,000 - 35,700 = $1,749,300

4.
a. Bad debt expense for the year = Net sales * 1/4th of 1%
= net sales * 0.25%
= 18,200,000 x 0.25%= $45,500

b. Balance in the allowance account after the adjustment of December 31.
45,500 - 3,170 adjustment = $42,330

c. Expected net realizable value of the accounts receivable as of December 31.
1,785,000 - 42,330 = $1,742,670

Date

Account title

Debit

Credit

Feb 8

Cash (18,000*40%)
Allowances for doubtful accounts
      Accounts receivable

7,200
10,800

18,000

May 27

Accounts Receivable
             Allowance for Doubtful Accounts

7,350

7,350

Aug 13

Allowance for Doubtful Accounts
                     Accounts Receivable

6,400

6,400

Oct 31

Accounts Receivable
             Allowance for Doubtful Accounts

3,880

3,880

Cash
     Accounts receivable

3,880

3,880

Dec 31

Allowance for Doubtful Accounts
           Accounts Receivable, Newbauer Co.,
          Accounts Receivable, Bonneville Co.,
         Accounts Receivable, Crow distributors,
          Accounts Receivable, Fiber Optics.

23,200

7,190
5,500
9,400
1,110

Dec 31

Bad Debt Expense
                Allowance for Doubtful Accounts
(35,700 + 3,170)note

38,870

38,870

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