Question

Entries Related to Uncollectible Accounts

The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31:

Jan. 19.	Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,630 cash in full payment of Arlene’s account.
Apr. 3.	Wrote off the $9,340 balance owed by Premier GS Co., which is bankrupt.
July 16.	Received 25% of the $16,800 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible.
Nov. 23.	Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,655 cash in full payment.
Dec. 31.	Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$7,025; Fogle Co., $2,085; Lake Furniture, $5,365; Melinda Shryer, $1,515.
Dec. 31.	Based on an analysis of the $825,700 of accounts receivable, it was estimated that $35,900 will be uncollectible. Journalized the adjusting entry.

Required:

1. Record the January 1 credit balance of $34,200 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts.

2. a. Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $825,700 balance in accounts receivable reflects the adjustments made during the year.

Jan. 19-reinstate	Accounts Receivable-Arlene Gurley	fill in the blank 0042dd055ff0f8e_2
	Allowance for Doubtful Accounts		fill in the blank 0042dd055ff0f8e_4
Jan. 19-collection	Cash	fill in the blank 0042dd055ff0f8e_6
	Accounts Receivable-Arlene Gurley		fill in the blank 0042dd055ff0f8e_8
Apr. 3	Allowance for Doubtful Accounts	fill in the blank 0042dd055ff0f8e_10
	Accounts Receivable-Premier GS Co.		fill in the blank 0042dd055ff0f8e_12
July 16	Cash	fill in the blank 0042dd055ff0f8e_14	fill in the blank 0042dd055ff0f8e_15
	Allowance for Doubtful Accounts	fill in the blank 0042dd055ff0f8e_17	fill in the blank 0042dd055ff0f8e_18
	Accounts Receivable-Hayden Co.	fill in the blank 0042dd055ff0f8e_20	fill in the blank 0042dd055ff0f8e_21
Nov. 23-reinstate	Accounts Receivable-Harry Carr	fill in the blank 0042dd055ff0f8e_23
	Allowance for Doubtful Accounts		fill in the blank 0042dd055ff0f8e_25
Nov. 23-collection	Cash	fill in the blank 0042dd055ff0f8e_27
	Accounts Receivable-Harry Carr		fill in the blank 0042dd055ff0f8e_29
Dec. 31-write-off	Allowance for Doubtful Accounts	fill in the blank 0042dd055ff0f8e_31	fill in the blank 0042dd055ff0f8e_32
	Accounts Receivable-Cavey Co.	fill in the blank 0042dd055ff0f8e_34	fill in the blank 0042dd055ff0f8e_35
	Accounts Receivable-Fogle Co.	fill in the blank 0042dd055ff0f8e_37	fill in the blank 0042dd055ff0f8e_38
	Accounts Receivable-Lake Furniture	fill in the blank 0042dd055ff0f8e_40	fill in the blank 0042dd055ff0f8e_41
	Accounts Receivable-Melinda Shryer	fill in the blank 0042dd055ff0f8e_43	fill in the blank 0042dd055ff0f8e_44
Dec. 31-adjusting	Bad Debt Expense	fill in the blank 0042dd055ff0f8e_46
	Allowance for Doubtful Accounts		fill in the blank 0042dd055ff0f8e_48

Feedback

Set up T accounts.
Recall that under the allowance method, the entry to write off an account debits Allowance for Doubtful Accounts and credits Accounts Receivable.
In such cases where an account receivable that has been written off is later collected, the account is reinstated by an entry that reverses the write-off entry. Then record the receipt of cash as payment for the account.
The amount of bad debt expense is affected by the balance in the allowance account.

2. b. Post each entry that affects the following T accounts and determine the new balances:

Allowance for Doubtful Accounts
Apr. 3	fill in the blank 7b10fa00b072fe0_2	Jan. 1 Balance	fill in the blank 7b10fa00b072fe0_3
July 16	fill in the blank 7b10fa00b072fe0_5	Jan. 19	fill in the blank 7b10fa00b072fe0_7
Dec. 31	fill in the blank 7b10fa00b072fe0_9	Nov. 23	fill in the blank 7b10fa00b072fe0_11
		Dec. 31 Unadjusted Balance	fill in the blank 7b10fa00b072fe0_13
		Dec. 31 Adjusting Entry	fill in the blank 7b10fa00b072fe0_15
		Dec. 31 Adjusted Balance	fill in the blank 7b10fa00b072fe0_16

Bad Debt Expense
Dec. 31 Adjusting Entry	fill in the blank 7b10fa00b072fe0_18

Feedback

Set up T accounts.
Recall that under the allowance method, the entry to write off an account debits Allowance for Doubtful Accounts and credits Accounts Receivable.
In such cases where an account receivable that has been written off is later collected, the account is reinstated by an entry that reverses the write-off entry. Then record the receipt of cash as payment for the account.
The amount of bad debt expense is affected by the balance in the allowance account.

3.  Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
$fill in the blank 7fc457f5af81fa5_1

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 of ½ of 1% of the sales of $5,100,000 for the year, determine the following:

a.  Bad debt expense for the year.
$fill in the blank 7fc457f5af81fa5_2

b.  Balance in the allowance account after the adjustment of December 31.
$fill in the blank 7fc457f5af81fa5_3

c.  Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
$fill in the blank 7fc457f5af81fa5_4