Beta Watches completed the following selected transactions during 2011 and 2012:
2011
Dec 31 Estimated that uncollectible account expense for the year was 3% of credit sales of $440,000 and recorded that amount as expense. Use the allowance method.
31 Made the closing entry for uncollectible account expense.
2012
Jan 17 Sold inventory to Manny Vasquez, $800, on account. Ignore cost of goods sold.
Jun 29 Wrote off Manny Vasquez’s account as uncollectible after repeated efforts to collect from him.
Aug 6 Received $800 from Manny Vasquez, along with a letter apologizing for being so late. Reinstated Vasquez’s account in full and recorded the cash receipt.
Dec 31 Made a compound entry to write off the following accounts as uncollectible:
Bill Kappy, $1,400; Mike Venture, $1,100; and Russell Reeves, $200.
31 Estimated that uncollectible account expense for the year was 3% on credit sales of $470,000 and recorded the expense.
31 Made the closing entry for uncollectible account expense.
Requirements
1. Open T-accounts for Allowance for uncollectible accounts and Uncollectible account expense. Keep running balances, assuming all accounts begin with a zero balance.
2. Record the transactions in the general journal, and post to the two T-accounts.
3. Assume the December 31, 2012, balance of Accounts receivable is $139,000. Show how net Accounts receivable would be reported on the balance sheet at that date. Use the three line format of reporting the net accounts receivable.