Question

At the beginning of the current period, Whisper Corp. had balances in Accounts Receivable of $211,700 and in Allowance for Doubtful Accounts of $8,370 (credit). During the period, it had net credit sales of $763,800 and collections of $782,420. It wrote off as uncollectible accounts receivable of $7,326. However, a $2,985 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $25,790 at the end of the period. (Omit cost of goods sold entries.)

1) Prepare entries to: record sales and collections during the period, to record the write-off of uncollectible accounts during the period, to record the recovery of the uncollectible account during the period, and to record bad debt expense for the period. All in this order.

2) Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts.

3) What is the net realizable value of the receivables at the end of the period?

Answer 1

1) Journal entry

No	Account and explanation	Debit	Credit
a	Account receivable	763800
	Sales revenue		763800
	(To record sales)
b	Cash	782420
	Account receivable		782420
	(To record collection)
c	Allowance for doubtful accounts	7326
	Account receivable		7326
	(To record write off)
d	Account receivable	2985
	Allowance for doubtful accounts		2985
	(To record reinstate account)
	Cash	2985
	Account receivable		2985
	(To record collection)
e	Bad debt expense (25790-4029)	21761
	Allowance for doubtful accounts		21761
	(To record bad debt expense)

2) Ending balance of account receivable = 185754

Ending balance of allowance for doubtful account = 25790

3) Net realizable value = 185754-25790 = 159964