Treat the following parts as three independent situations. Part 1 of 3 Lynbrook Automotive, Inc. applies...

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Treat the following parts as three independent situations. Part 1 of 3 Lynbrook Automotive, Inc. applies the allowance method

business accounting

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Answer 1

Answer #1

1.

	Account Titles	Debit	Credit
(a)	Accounts Receivable	$ 14,00,000
	Delivery Revenue		$ 14,00,000
	(Provided Delivery services on account)

(b)	Allowance for Doubtful Debts	$ 17,000
	Accounts Receivable		$ 17,000
	(Accounts receivable written off)

(c )	Accounts Receivable	$ 2,000
	Allowance for Doubtful Debts		$ 2,000
	(Restated accounts earlier written off)

	Cash	$ 2,000
	Accounts Receivable		$ 2,000
	(Collection of accounts written off)

(d)	Cash	$ 17,50,000
	Accounts Receivable		$ 17,50,000
	(Cash collected from accounts)

( e)	Bad Debt Expense	$ 6,655
	Allowance for Doubtful Debts		$ 6,655
	(Bad debt expense recorded)

Accounts receivable =700000+1400000-17000+2000-2000-1750000 = $333000
Unadjusted Allowance for Doubtful debts =20000-17000+2000 = $5000
Allowance for Doubtful debts ending balance = $333000 x 3.5% = $11655
Bad Debt expense = $11655 - $5000 = $6655

2. Net Realizable Value = Accounts Receivable - Allowance for Doubtful debts
= $333000 - $11655 = $321345

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Answer 2

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