Question

The following transactions were completed by Daws Company during the current fiscal year ended December 31: Jan. 29 Apr. 18 Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt business, and wrote off the remainder as uncollectible. Reinstated the account of Spencer Clark, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,000 cash in full payment of Clark's account. Wrote off the $11,850 balance owed by Iron Horse Co., which has no assets. Aug. 9 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. Dec. 31 Wrote off the following accounts as uncollectible (one entry): Beth Connelly Inc., $12,100; DeVine Co., Dec. 31 $8,110, Moser Distributors, $21.950; Oceanic Optics, $10,000. Based on an analysis of the $1,450,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry.

Answer 1

Daws Company Journal Enteries Date Particulars Jan-29 Cash a/c Dr. Allowance for Doubtful accounts Dr. To Accounts Receivable - Kovar Co. (Cash from debtors) Debit in $ Credit in $ 3150 5850 9000 Jan-29 Aug-09 Dec-31 Allowance for Doubtful accounts 5850 Jan-01 54200 11850 Apr-18 4000 52160 Nov-07 7000 Dec-31 64660 60000 129860 129860 Bal 4000 Apr-18 Accounts Receivable-Spencer Clark a/c Dr. To Allowance for Doubtful accounts 4000 Bad Debt Expense 64660 Dec-31 4000 Bal Cash a/c Dr. To Accounts Receivable -Spencer Clark 64660 64660 4000 64660 11850 Aug-09 Allowance for Doubtful accounts Dr. To Accounts Receivable - Kovar Co. 11850 7000 Nov-07 Accounts Receivable -Vinyl Co. a/c Dr. To Allowance for Doubtful accounts 7000 7000 Cash a/c Dr. To Accounts Receivable -Vinyl Co. 7000 52160 Dec-31 Allowance for Doubtful accounts Dr. To Accounts Receivable-Beth Connelly inc. To Accounts Receivable-Devine Co. To Accounts Receivable -Moser Distributors To Accounts Receivable -Oceanic Optics 12100 8110 21950 10000 64660 64660 Dec-31 Bad Debt Expense a/c Dr. To Allowance for Doubtful accounts 60000 + 4660 = 64660 54200 - 5850 + 4000 - 11850 + 7000 - 52160 =-4660

3.Net Realizable value of accounts receivable = 1450000 - 60000 = 1390000

4a.Bad debt expense for the year = 13200000 x 0.005 = 66000

4b.Balance in allowance account after adjustment = 66000 - 4660 = 61340

4c.Expected Realizable Value of Accounts Receivable = 1450000 - 61340 = 1388660