Question

Dec. 20: Reinstated the account of William Pruitt and received $2,330 cash in full payment.

Dec. 20-Reinstate
Dec. 20-Collection

Dec. 20. Reinstated the account of Paula Spitler and received $3,580 cash in full payment.

Reinstate
Collection

Percent of Sales Method

At the end of the current year, Accounts Receivable has a balance of $815,000; Allowance for Doubtful Accounts has a debit balance of $7,500; and sales for the year total $3,670,000. Bad debt expense is estimated at 1/2 of 1% of sales.

a. Determine the amount of the adjusting entry for uncollectible accounts.
$

b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.

	Adjusted Balance Debit (Credit)
Accounts Receivable	$
Allowance for Doubtful Accounts	$
Bad Debt Expense	$

c. Determine the net realizable value of accounts receivable.
$

Answer 1

Solution-1)

   DIRECT WRITE-OFF METHOD             
Date   Particulars   Debit   Credit     
Oct-02   Cash   2450         
   Bad debt expense   2330         
   Accounts Receivable – William Pruitt       4780     
                 
Dec-20   Reinstate             
   Accounts Receivable – William Pruitt   2330         
   Bad Debt Expense       2330     
                 
   Collection             
   Cash   2330         
   Accounts Receivable – William Pruitt       2330     
  
   ALLOWANCE METHOD             
Date   Particulars   Debit   Credit     
Oct-02   Cash   2450         
   Allowance for Doubtful accounts   2330         
   Accounts Receivable – William Pruitt       4780     
                 
Dec-20   Reinstate             
   Accounts Receivable – William Pruitt   2330         
   Allowance for Doubtful accounts       2330     
                 
   Collection             
   Cash   2330         
   Accounts Receivable – William Pruitt       2330     

As per policy we have to answer first question