The following transactions were completed by The Irvine Company during the curre
ID: 2760099 • Letter: T
Question
The following transactions were completed by The Irvine Company during the current fiscal year ended December 31: Feb. 8 Received 40% of the $18,500 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 $7,430 cash in full payment of Seth’s account. Aug. 13 Wrote off the $6,470 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 $3,870 cash in full payment of the account. Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,245; Bonneville Co., $5,595; Crow Distributors, $9,500; Fiber Optics, $1,060. Dec. 31 Based on an analysis of the $1,769,500 of accounts receivable, it was estimated that $35,390 will be uncollectible. Journalized the adjusting entry. Required: 1. Record the January 1 credit balance of $25,330 in a T account for Allowance for Doubtful Accounts. 2. A. Journalize the transactions. For the December 31 adjusting entry, assume the $1,769,500 balance in accounts receivable reflects the adjustments made during the year. Refer to the chart of accounts for a listing of the account titles the company uses. B. Post each entry that affects the following selected T accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense. 3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). 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 ¼ of 1% of the net sales of $18,430,000 for the year, determine the following: A. Bad debt expense for the year. B. Balance in the allowance account after the adjustment of December 31. C. Expected net realizable value of the accounts receivable as of December 31.
A. Journalize the transactions. For the December 31 adjusting entry, assume the $1,769,500 balance in accounts receivable reflects the adjustments made during the year. Refer to the chart of accounts for a listing of the account titles the company uses.
Explanation / Answer
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 ¼ of 1% of the net sales of $18,430,000 for the year, determine the following: A. Bad debt expense for the year. B. Balance in the allowance account after the adjustment of December 31. C. Expected net realizable value of the accounts receivable as of December 31.
Balance in Allowance for Doubtful Accounts =46075-4140=41935 CR balance
DR CR Feb-08 Cash 40%*18500 7400 Allowance for Doubtful Accounts 18500*.60 11100 Accounts Receivable 18500 May 27 Accounts Receivable 7430 Allowance for Doubtful Accounts 7430 Cash 7430 Accounts Receivable 7430 Aug. 13 Allowance for Doubtful Accounts 6470 Accounts Receivable 6470 Oct. 31 Accounts Receivable 3870 Allowance for Doubtful Accounts 3870 Cash 3870 Accounts Receivable 3870 Dec-31 Allowance for Doubtful Accounts 23400 Accounts Receivable Newbauer Co. 7245 Accounts Receivable Bonneville Co 5595 Accounts Receivable Crow Distributors 9500 Accounts Receivable Fiber Optics 1060Related Questions
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