Question

PR 9-1A Entries related to uncollectible accounts year ended December 31 Jan. 29, Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt business, Apr. 18. Reinstated the account of Spencer Clark, which had been written off in the OBJ.4 3.$1,390,000 The following transactions were completed by Daws Company during the current fiscal General Ledger and wrote off the remainder as uncollectible Show Me How preceding year as uncollectible. Journalized the receipt of $4,000 cash in full payment of Clark's account. Aug. 9. Wrote off the $11,850 balance owed by Iron Horse Co., which has no assets. Nov. 7. Reinstated the account of Vinyl Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,000 cash in full payment of the account. $12,100; DeVine Co., $8,110; Moser Distributors, $21,950; Oceanic Optics, $10,000. that $60,000 will be uncollectible. Journalized the adjusting entry Dec. 31. Wrote off the following accounts as uncollectible (one entry): Beth Connelly Inc. 31. Based on an analysis of the $1,450,000 of accounts receivable, it was estimated Instructions 1. Record the January 1 credit balance of $54,200 in a T account for Allowance for Doubtful Accounts. Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances: 2. Allowance for Doubtful Accounts Bad Debt Expense 3. Determine the expected net realizable value of the accounts receivable as of December 31. 4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables the adjusting entry on December 31 had been based on an estimated expense oftá of 1% of the sales of $13,200,000 for the year, determine the following: a. Bad debt expense for the year b. Balance in the allowance account after the adjustment of December 31 c. Expected net realizable value of the accounts receivable as of December 31

Answer 1

Since, multiple questions have been posted, I have answered all the parts of PR 9-1A.

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We will have to first prepare the journal entries (which is Part 2) and thereafter Complete T-Accounts as required in Part 1 and Part 2.

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Part 2)

The journal entries are prepared as below:

Date	Account Name	Debit	Credit
Jan.29	Cash (9,000*35%)	$3,150
	Allowance for Doubtful Accounts (9,000*65%)	$5,850
	Accounts Receivable-Kovar Co.		$9,000
Apr.18	Accounts Receivable-Spencer Clark	$4,000
	Allowance for Doubtful Accounts		$4,000
Apr.18	Cash	$4,000
	Accounts Receivable-Spencer Clark		$4,000
Aug.9	Allowance for Doubtful Accounts	$11,850
	Accounts Receivable-Iron Horse Co.		$11,850
Nov.7	Accounts Receivable-Vinyl Co.	$7,000
	Allowance for Doubtful Accounts		$7,000
Nov.7	Cash	$7,000
	Accounts Receivable-Vinyl Co.		$7,000
Dec.31	Allowance for Doubtful Accounts	$52,160
	Accounts Receivable-Beth Connelly Inc.		$12,100
	Accounts Receivable-DeVine Co.		$8,110
	Accounts Receivable-Moser Distributors		$21,950
	Accounts Receivable-Oceanic Optics		$10,000
Dec.31	Bad Debt Expense (60,000 + 4,660)	$64,660
	Allowance for Doubtful Accounts		$64,660

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Part 1 and 2)

The T-Accounts are given as follows:

Allowance for Doubtful Accounts (T-Account)
Jan.29	5,850	54,200	Jan.1
Aug.9	11,850	4,000	Apr.18
Dec.31	52,160	7,000	Nov.7
Dec.31 (Unadjusted Balance)	4,660	64,660	Dec.31 (Adjusting Entry)
		$60,000	Dec.31 (Adjusted Bal.)

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Bad Debt Expense
Dec.31 (Adjusting Entry)	64,660

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Part 3)

The expected net realizable value of the accounts receivable as of December 31 is determined as below:

Expected Net Realizable Value = Total Value of Accounts Receivable - Estimated Uncollectible = 1,450,000 - 60,000 = $1,390,000

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Part 4)

a)

The value of bad debt expense for the year is calculated as follows:

Bad Debt Expense = Net Sales*1%*1/2 = 13,200,000*1%*1/2 = $66,000

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b)

The balance in the allowance account after the adjustment of December 31 is arrived as below:

Balance in Allowance Account = Bad Debt Expense - Unadjusted Balance = 66,000 - 4,660 = $61,340

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c)

The expected net realizable value of the accounts receivable as of December 31 is determined as follows:

Expected Net Realizable Value = Total Value of Accounts Receivable - Balance in Allowance Account = 1,450,000 - 61,340 = $1,388,660