Accounting for Uncollectible Receivables. Complete the table.

The Solo Company was started on January 1, 2011. The following events occurred during 2011 and 2012.

2011

1. Provided $4,000 of services on account.

2. Collected $3,000 cash from accounts receivable.

3. Estimated uncollectible accounts expense to be 1.5 percent of 2011 credit sales.

2012

1. Wrote off $40 of accounts receivable that were deemed uncollectible.

2. Provided $6,500 of services on account.

3. Collected $5,400 cash from accounts receivable.

4. Received $5 from a bad debt that had been previously written off. Reinstated the account.

5. Recorded the $5 cash received from the receivable reinstated in Event No. 4.

6. Estimated uncollectible accounts expense to be 1 percent of 2012 credit sales.

Required

a. Record the events in a statements model under the titles of the affected accounts. Record a zero under each heading not affected by a given event.

b. Determine the net realizable value of accounts receivable at the end of each year.

2011

Net Realizable Value, 2011:

_____________________________________

Net Realizable Value, 2011:

_____________________________________

Solo Company Balance Sheet Statement of Income Statement Event Equity Rev. Cash Flows Assets Exp. Net Inc. Cash Note Int. Ret. Rec. Rec. Ear. 1 2. 3. Totals 2012 Babb Enterprises Statement of Balance Sheet Income Statement Exp. Net Inc. Cash Flows Event Assets Equity Rev. Cash Note Int. Ret. Rec Rec. Ear. Beg. Balance 1. 2. 3. 4. 5. 6. Totals