Question

n December 31, 2017, when its accounts receivable were $342,000 and its account Allowance for Doubtful Accounts had an unadjusted debit balance of $2,300, Pearl City Corp. estimated that $19,200 of its accounts receivable would become uncollectible, and it recorded the bad debts adjusting entry. On May 11, 2018, Pearl City determined that Fei Ya Cheng’s account was uncollectible and wrote off $2,200. On November 12, 2018, Cheng paid the amount previously written off. Note that Bad Credit expense is debited as $21500 ($19200 + $ 2300).

What is the carrying amount of the receivables on (1) December 31, 2017; (2) May 11, 2018; and (3) November 12, 2018, assuming that the total amount of accounts receivable of $342,000 is unchanged on each of these three dates except for any changes recorded above.

Answer 1

Dec 31, 2017	Accounts Receivable Balance	$   3,42,000
	Less: Credit balance of Allowance for Doubtful Accounts	$      21,500
	Carrying Amount of Receivables as on Dec 31, 2017	$   3,20,500
May 11, 2018	Accounts Receivable Balance	$   3,39,800
	Less: Credit balance of Allowance for Doubtful Accounts	$      17,000
	Carrying Amount of Receivables as on Dec 31, 2017	$   3,22,800
Nov 12, 2018	Accounts Receivable Balance	$   3,39,800
	Less: Credit balance of Allowance for Doubtful Accounts	$      19,200
	Carrying Amount of Receivables as on Dec 31, 2017	$   3,20,600

Working Notes:

a) The combined balance of the Accounts Receivable Account and Allowance for Doubtful Accounts represents the carrying amount of receivables on a particular date

b)

Journal
Date	Particulars	Debit	Credit
31-12-2017	Bad Debt Expense	$ 21,500
	Allowance for Doubtful Accounts		$ 21,500
	(Bad debt expense recorded)
11-05-2018	Allowance for Doubtful Accounts	$     2,200
	Accounts Receivable		$     2,200
	(Uncollectible account written off)
12-11-2018	Accounts Receivable	$     2,200
	Allowance for Doubtful Accounts		$     2,200
	(Accounts receivable reinstated because of recovery)
	Cash	$     2,200
	Accounts Receivable		$     2,200
	(Cash Collected from customer on account of recovery)

c)

Accounts Receivable

Allowance for Doubtful Accounts

Date

Particulars

Amount

Date

Particulars

Amount

Date

Particulars

Amount

Date

Particulars

Amount

Dec 31, 2017

Beginning Balance

$   3,42,000

Dec 31, 2017

Ending Balance

$   3,42,000

Dec 31, 2017

Beginning Balance

$     2,300

Dec 31, 2017

Bad Debt Expense

$ 21,500

$   3,42,000

$   3,42,000

Dec 31, 2017

Ending Balance

$ 19,200

$ 21,500

$ 21,500

May 11, 2018

Beginning Balance

$   3,42,000

May 11, 2018

Allowance for Doubtful Accounts

$         2,200

May 11, 2018

Accounts Receivable

$     2,200

May 11, 2018

Beginning Balance

$ 19,200

May 11, 2018

Ending Balance

$   3,39,800

May 11, 2018

Ending Balance

$ 17,000

$   3,42,000

$   3,42,000

$ 19,200

$ 19,200

Nov 12, 2018

Beginning Balance

$   3,39,800

Nov 12, 2018

Cash

$         2,200

Nov 12, 2018

Ending Balance

$ 19,200

Nov 12, 2018

Beginning Balance

$ 17,000

Nov 12, 2018

Allowance for Doubtful Accounts

$         2,200

Nov 12, 2018

Ending Balance

$   3,39,800

Accounts Receivable

$     2,200

$   3,42,000

$   3,42,000

$ 19,200

$ 19,200