Acton Accountants Ltd. had the following account balances on December 1, 2015:
Accounts Receivable, $72,344; Allowance for Doubtful Accounts, $(2,355). Acton Accountants completed the following selected transactions during the final two weeks of the current fiscal year:
Dec. 16. Billed Davies and Company for $12,500 in accounting services.
16. Received $3,500 as partial payment on the $4,000 account of Kathy Solomon. Wrote off the remaining balance as uncollectible.
18. Received a $1,000 deposit for accounting work to be performed in January for Mars Inc.
22. Received $500 from Kathy Solomon, which had been written off on December 16. Reinstated the account and recorded the cash receipt.
31. Wrote off the following accounts as uncollectible (record as a compound journal entry):
Pat O’Higgins ............ $1,575
Matt Westby ............ 4,600
Shan Treadwell .......... 895
Wang Chu ............. 1,255
31. Acton Accountants Ltd. uses the percent of sales method of estimating uncollectible accounts expense. Based on past history, 1% of sales are expected to be uncollectible. Acton Accountants Ltd. recorded sales of $1,024,900 during 2015.
Instructions
1. Record the December 1 balances in T accounts for Accounts Receivable and for Allowance for Doubtful Accounts.
2. Journalize the transactions. Post each entry that affects the above-mentioned T accounts and determine the new balances.
3. Determine the net realizable value of the accounts receivable as at December 31, 2015.