Question

Cabbage White Map Company's balance sheet at December 31, 2017, reported the following (Click the icon to view the data) Read the requirements Requirement 1. How much of the receivables did Cabbage White expect to collect Stated differently, what was the net realizabie value of these receivable? The net realizable value of these receivables is SL Requirement 2. Joumalize, without explanations, 2018 entries for Cabbage White and post to the Accounts Receivable and Allowance for Bad Debts T-accounts Begin with the journal entries. (Record debits first, then credits. Exclude explanations from journal entries) a. Total credit sales for 2018 were $90,000 (ignore Cost of Goods Sold) Data Table Date Accounts and Explanation Debit Credit 2018 $ 50 000 Accounts Receivable Loss Allowance for bad debts Print Done Choose from any list or enter any number in the input fields and then continue to the next question

Answer 1

Requirement 1:

Net realisable value of these accounts receivables = $47500

Solution :

Net realisable value of accounts receivables = Gross amount of accounts receivables - allowance for bad debts

= $50000 - $2500

= $47500

Requirement 2:

a. To record credit sales of $90000

Date	Accounts	Debit	Credit
	Accounts receivables	$90000
	Sales		$90000

b. To record cash collected.

Date	Accounts and explanation	Debit	Credit
	Cash	$81000
	Accounts receivables		$81000

c. To record accounts receivables identified as uncollectable.

Date	Accounts and explanation	Debit	Credit
	Bad debts expense	$1100
	Allowance for bad debts		$1100

As total accounts identified as uncollectable amounts to $3600 and already the allowance for bad debts has a balance of $2500, the remaining $1100 ($3600-$2500) is recorded as expense.

Accounts receivable :

Jan 1 2018 balance	$50000	$81000	Cash
Sales	$90000	$59000	31 Dec 2018 balance

Allowance for bad debts :

		$2500	Jan 1, 2018 bal
		$1100	bad debt expense
Dec 31,2018 bal	$3600