9.4
Entries Related to Uncollectible Accounts The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31: Jan. 19. Apr. 3. July 16. Nov. 23. Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,515 cash in full payment of Arlene's account. Wrote off the $8,680 balance owed by Premier GS Co., which is bankrupt. Received 25% of the $15,600 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,470 cash in full payment. Wrote off the following accounts as uncollectible (one entry): Cavey Co., $6,530; Fogle Co., $1,940; Lake Furniture, $4,985; Melinda Shryer, $1,410. Based on an analysis of the $768,200 of accounts receivable, it was estimated that $33,400 will be uncollectible. Journalized the adjusting entry. Dec. 31. Dec. 31. Required: 1. Record the January 1 credit balance of $31,800 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts. 2. a. Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $768,200 balance in accounts receivable reflects the adjustments made during the year. Jan. 19-reinstate Accounts Receivable-Arlene Gurley 1,515 Allowance for Doubtful Accounts 1,515 Jan. 19-collection Cash 1,515 Accounts Receivable-Arlene Gurley 1,515 Apr. 3 Allowance for Doubtful Accounts 8,680 Accounts Receivable-Premier GS Co. 8,680 July 16 Cash 3,900 Allowance for Doubtful Accounts 11,700 Accounts Receivable-Hayden Co. 15,600 Nov. 23-reinstate Accounts Receivable-Harry Carr 2,470 Allowance for Doubtful Accounts 2,470 Nov. 23-collection Cash 2,470 Accounts Receivable-Harry Carr 2,470 Dec. 31-write-off Allowance for Doubtful Accounts 14,865 Accounts Receivable-Cavey Co. 6,530 Accounts Receivable-Fogle Co. 1,940 Accounts Receivable-Lake Furniture 4,985 Accounts Receivable-Lake Furniture 4,985 Accounts Receivable-Melinda Shryer 1,410 Dec. 31-adjusting Bad Debt Expense 35,245 X Allowance for Doubtful Accounts 35,245 X 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Apr. 3 Jan. 1 Balance 31,800 July 16 Jan. 19 Dec. 31 Nov. 23 Dec. 31 Unadjusted Balance Dec. 31 Adjusting Entry Dec. 31 Adjusted Balance 33,400 Bad Debt Expense Dec. 31 Adjusting Entry 50,000 X 3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). 4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of 12 of 1% of the sales of $4,740,000 for the year, determine the following: a Bad debt expense for the year. b. Balance in the allowance account after the adjustment of December 31. C. Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry)
