Monique\'s Trading Company balance sheet at December 31, 2016, reported the foll

Question

Monique's Trading Company balance sheet at December 31, 2016, reported the following .$1,000,000 Allowance for uncollectible accounts... The following are the transactions to be taken into consideration for 2017: a. Total credit sales for 2017 were $2,400,000 b. 2% of sales were estimated to be uncollectible. c. The company received cash payments on account during 2017 for $900,000 d. Accounts receivable identified to be uncollectible totaled $64,000. e. December 31, 2017, aging of receivables indicates that $72,000 of the receivables are uncollectible. Requirements 1. What was the net realizable value of the receivables as at December 31,2016 2. Prepare the journal entries for the company's 2017 transactions. 3. Prepare the Accounts receivable and the Allowance for uncollectible accounts T-accounts based on the information presented above. (Hint!!! The opening balances and the transactions from the journal entries must be recorded in their respective accounts) 4. What is the net realizable value of receivables as at December 31, 2017? (show workings)

Explanation / Answer

1) Net receivable value of the receivable Account receivabe 1,000,000 less:allowance for uncollectible accounts 33,330 Net receivable value of the receivable 966,670 2) Journal Entries Accounting titles & Explanations Debit Credit a) Account receivable 2,400,000 sales 2,400,000 b) Bad debts expense 48000 Allowance for uncollectible account 48,000 (2,400,000*2%) c) Cash 900,000 Account receivable 900,000 d) Allowance for uncollectible account 64,000 Account receivable 64,000 e) Bad debts expense 54,670 Allowance for uncollectible account 54,670 ( 3) Accounts receivable Beg 1,000,000 a) 2,400,000 c) 900,000 d) 64,000 End bal 2,436,000 Allowance for uncollectible account d) 64,000 Beg bal 33,330 b) 48,000 e) 54,670 End bal 72,000 4) Account receivabe 2,436,000 less:allowance for uncollectible accounts 72,000 Net receivable value of the receivable 2,364,000

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