Question

UNCOLLECTIBLE ACCOUNTS_ALLOWANCE METHOD Pyle Nurseries used the allowance method to record the following transactions, adjusting entries, and ing entries during the year ended December 31, 20- Feb. 9 Received 60% of the $4,000 balance owed by Wiley's Waterworks, a bankrupt business, and wrote off the remainder as uncollectible. May 28 Reinstated the account of Amanda Akin, which had been written off in the preceding year, and received $2,100 cash in full settlement. Aug. 16 Wrote off the $5,700 balance owed by JoJo Xu as uncollectible. Oct. 5 Reinstated the account of Tomi Kennedy which had been written off in the preceding year, and received $3,100 cash in full settlement. Dec. 28 Wrote off the following accounts as uncollectible, in compound entry form: Jacobs & Wilson, $10,900; Specialty Landscapes, $15,360; Kiana Hoyer, $13,170. 31 Based on an aging analysis of the $965,000 of accounts receivable, it was estimated that $50,800 will be uncollectible. Made the adjusting entry. 31 Made the entry to close the appropriate account to Income Summary Selected accounts and beginning balances on January 1, 20--, are as follows: 122.1 Allowance for Doubtful Accounts $43,000 credit Income Summary 532 Bad Debt Expense 313 REQUIRED 1. Open the three selected general ledger accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal (page 6). After each entry, post to the appropriate selected accounts. 3. Determine the net realizable value as of December 31.

Answer 1

Pyle Nurseries Reg 2A Journal entries Date Account 9-Feb Cash Allowance for Doubtful Accounts Accounts Receivable Credit Debit $ 2,400 $ 1,600 Calculation -4,000*60% $ 4,000 $ 2,100 28-May Accounts Receivable Allowance for Doubtful Accounts $ 2,100 $ 2,100 28-May Cash Accounts Receivable $ 2,100 $ 5,700 16-Aug Allowance for Doubtful Accounts Accounts Receivable $ 5,700 $ 3,100 5-Oct Accounts Receivable Allowance for Doubtful Accounts $ 3,100 $ 3,100 5-Oct Cash Accounts Receivable $ 3,100 $ 39,430 $ 10,900 $ 15,360 $ 13,170 28-Dec Allowance for Doubtful Accounts Accounts Receivable Accounts Receivable Accounts Receivable Adjusting entries 31-Dec Bad Debt Expense Allowance for Doubtful Accounts Closing entries 31-Dec Income Summary Bad Debt Expense $49,330 =50,800-1,470 From T Accounts $49,330 $49,330 $49,330

Date Credit Date Credit Pyle Nurseries Req 1 & 2B T Accounts Date Debit Date Credit Allowance for Doubtful Accounts Jan 1 Bal $ 43,000 9-Feb $ 1,600 28-May $ 2,100 16-Aug $ 5,700 5-Oct $ 3,100 28-Dec $ 39,430 Debit Date Bad Debt Expense Debit Date Income Summary Unadj Bal. $ . Unadj Bal. $ 1,470 31-Dec $ 49,330 Unadj Bal. $ - 31-Dec $ 49,330 Adj Bal. $ 50,800 Adj Bal. $ 49,330 Adj Bal. $ . 31-Dec $ 49,330 31-Dec $ 49,330 Bal. $(49,330) Bal. $ 50,800 Bal. Req3 Expected net realizable value of the accounts receivable Accounts Receivable 965,000 Less: Allowance for Doubtful Accounts (50,800) Net realizable value of accounts receivable 914,200