Question

The following transactions were completed by Irvine Company during the current fiscal year ended December 31: Feb. 8 Received 35% of the $18,600 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 $7,445 cash in full payment of Seth’s account. Aug. 13 Wrote off the $6,375 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 $3,840 cash in full payment of the account. Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,240; Bonneville Co., $5,575; Crow Distributors, $9,355; Fiber Optics, $1,035. Dec. 31 Based on an analysis of the $1,768,000 of accounts receivable, it was estimated that $35,360 will be uncollectible. Journalized the adjusting entry. 1. Record the January 1 credit balance of $26,195 in a T-account for Allowance for Doubtful Accounts. 2. A. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. 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 $18,380,000 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.

Answer 1

ANSWER

Journal Entry Date Particulars Dr Amount Cr Amount Feb. 8 | $6,510 $12.090 Cash A/C Dr. Bad debts A/C Dr. To Accounts receivables Alc (Amount recd. From De Cow Co. and the remainder as uncollectible) $18.600 $7.445 May 27 Accounts Receivable A/C Dr. To bad Debts Recovered A/C (reinstated the Balance of Seth's Accounts written off last year) $7.445 Dr. $7.445 Aug. 13 Cash A/C To Accounts Receivables A/C (Amount recd from Seth's Account) $7,445 Dr 6,375 Aug. 13 Bad debts A/C To Accounts Receivables Alc (Amt. recd from Kat tracks Co. has written off) $6,375 Oct. 31 83,840 Cash A/C Dr. To Bad debts A/C (Cash recd from Crawford Co. written off last year recd in full) Dec.31 Dr. $23.205 Bad Debts A/C To Accounts Receivable A/C (Amount written off deems to be uncollectible) $23.205 Dec.31 $9.165 Allowance For Bad Debts A/c (Exp) Dr | To Allowance for B Debts (Balance Sheet) (Provision created during the year) $9.165

Allowance for Bad Debts Alc Date Particulars Amount Date Particulars Amount Dec-31 Dec-31 T. Balance CLE To Balance C/F $35.360 Jan. 1 Dec.31 To Balance B/f By Profit & Loss A/C (Balancing Figure) $26.195 $9.165 $35,360 $35,360 _ I Bad Debts Alc Date Particulars Amount Date Particulars Amount Dec. 31 $41.670 Feb. 8 Aug. 13 Dec.31 To Accounts Receivable Alc To Accounts Receivable A/c To Accounts Receivable Alc $12.090 $6,375 $23.205 To Profit & Loss A/C (Balancing Figure) $41.670 $41.670 - Net Realizable Value of Accounts Receivables Balance of Accounts Receivables Less: Provision at Dec 31 Less: Bad Debts of Dew Cow Co. Less: Bad Debts of kat Track co, Less: Bad debts Written off On Dec 31 $1.768.000 ($23,205) (S12.090) (36,375) ($23,205) Net Realizable Value $1,703,125

Answer 4. A. Bad debts expenses - $41670 Bad Debts Alc Date Particulars Amount Date Particulars Amount $9,165 Dec. 31 89,165 Feb. 8 Aug. 13 Dec.31 To Accounts Receivable A/C To Accounts Receivable A/C To Accounts Receivable Alc To Profit & Loss A/C (Balancing Figure) SO $9.165 $9.165 Answer 4. B Allowance for Bad Debts Alc Particulars Date Amount Date Particulars Amount Dec-31 To Balance C/F $45,950 Jan. 1 Dec.31 To Balance B/f By Profit & Loss A/C (Balancing Figure) $26.195 $19.755 $45.950 $45.950 Net Realizable Value of Accounts Receivables Balance of Accounts Receivables Less: Provision at Dec 31 Less: Bad Debts of Dew Cow Co. Less: Bad Debts of kat track co, Less: Bad debts Written off on Dec 31 $1,768,000 ($45.950) ($12.090) (36,375) ($23,205) Net Realizable Value $1,680,380

_____________________________________________

If you have any query or any Explanation please ask me in the comment box, i am here to helps you.please give me positive rating.

*****************THANK YOU**************