Question

5 (12 points) Barney's Computer Store has the following account balances on December 31, 2012 Allowance for doubtful accounts (prior to adjustment)- Accounts receivable Net credit sales ONLY 1,600 Debit 180.000 The credit manager at Barney's prepared an aging schedule of accounts receivable and estimates that 58.500 450,000 will prove to be uncollectible. Instructions (a) Prepare the adjusting entry to record the estimated uncollectible accounts expense on December 31, 2012 General Journal Account Title Date Debit Credit (b) On March 26, 2013, the credit manager a halance owed by Echo Company. Journalize the appropriate entry to record the write-off of Echo Barney's Computer Store authorizes a wpite-off of the 5900 company's account, General Journal Account Title Date Debit Credit (c) Assume that on March 26, before the above write-off, the balance of the Accounts Receivable account is $145,000 and the balance in Allowance for Doubtful Accounts is a credit of $6,000, Show the computation of Net Realizable Value for Accounts Receivable before and after the write-off of Echo Company's account above. After Before (d) Prepare the journal entry to record the March 26 write-off of Echo Company's account assuming instead that Barney's Computer Store uses the Direct Write-off method. General Journal Credit Debit Account Title Date

Answer 1

Solution a:

Journal Entries - Barney
Date	Particulars	Debit	Credit
31-Dec	Bad debts expense Dr ($8,500 + $1,600)	$10,100.00
	To Allowance for doubtful accounts		$10,100.00
	(To record bad debts expenses)

Solution b:

Journal Entries - Barney
Date	Particulars	Debit	Credit
26-Mar	Allowance for doubtful accounts	$900.00
	To Accounts receivables		$900.00
	(To write off receivables)

Solution c:

	Before write off	After write off
Gross receivables	$145,000.00	$144,100.00
Allowance for doubtful accounts	$6,000.00	$5,100.00
Net accounts receivables	$139,000.00	$139,000.00

solution d:

Journal Entries - Barney
Date	Particulars	Debit	Credit
26-Mar	Bad debts expense Dr	$900.00
	To Accounts receivables		$900.00
	(To write off receivables)