Question

Question 3 Dialex. Watches completed the following selected transactions during 2007 & 2008: 2007 Dec. 31 Estimated that uncollectible-account (bad-debt) expense for the year was 1% of credit sales of $400,000 and recorded the amount as expense. Use the allowance method. Dec. 31 Made the closing entry for uncollectible-account expense. 2008 Jan. 17 Sold inventory to Mitch Vanez, $600, on account. Ignore cost of goods sold. June. 29 Wrote off Mitch Vanez's account as uncollectible after repeated effort to collect from him. Aug. 6 Received $600 from Mitch Vanez, along with a letter apologizing for being so late. Reinstated Vanez's account in full and recorded the cash receipt. Dec. 31 Made a compound entry to write off the following accounts as uncollectible: Bernard Klaus, $1,700; Marie Monet, $1,300. Mona School of Business Management, university of the West Indies at Mon. - 4 Dec. 31 Estimated that uncollectible expense for the year was 1% of credit sales of $480,000, and recorded that amount as expense Dec. 31 Made the closing entry for uncollectible-account expense. Requirements: a) The December 31, 2008 balance of Accounts Receivable is $139,000. Show how Accounts Receivable would be reported on the balance sheet at that date.

Answer 1

in S Dr Date Particulars 2007 Dec-31 Balance c/d 4,000 4,000 Total 2008 Jun-29 Accounts Receivable Dec-31 Accounts Receivable |(1700+1300) Allowance for Doubtful Accounts in $ Date Particulars 2007 4,000 Dec-31 Bad Debt expense (400000*1%) 4,000 Total 2008 600 Jan-01 Balance b/d 3,000 Aug-06 Accounts Receivable Dec-31 Bad Debt expense (480000*1%) 5,800 17,400 Total 4,000 600 4,800 Dec-31 Balance c/d Total 17,400 Reporting of Accounts Receivable as on December 31, 2008 Balance Sheet Assets Current Assets Accounts Receivable (-) Allowance for Doubtful Accounts Net Accounts Receivable $ $ $ 1,39,000 -5,800 1,33,200