Accounts receivable transactions are provided below for J Looney Co.
Dec. 31, 2016 The company estimated that 5% of its accounts receivable would become uncollectible. The balances in the Accounts Receivable account and Allowance for Doubtful Accounts were $650,000 and $2,300 (debit), respectively.
Mar. 5, 2017 The company determined that R.Mirza's $3,700 account and D.Wight's $6,900 account were uncollectible. The company's accounts receivable were $685,000 before the accounts were written off.
June 6, 2017 Wight paid the amount that had been written off on March 5. The company's accounts receivable were $641,000 prior to recording the cash receipt for Wight.
Instructions
(a) Prepare the journal entries on December 31, 2016, March5, 2017, and June 6, 2017.
(b) Post the journal entries to Allowance for Doubtful Accounts and calculate the new balance after each entry.
(c) Calculate the net realizable value of the accounts receivable both before and after recording the cash receipt from Wight on June 6, 2017.