Accounting for Uncollectible Receivables The Solo Company was started on January 1, 2011 The following events occurred during 2011 and 2012 2011 Provided $4,000 of services on account Collected $3,000 cash from accounts receivable Estimated uncollectible accounts expense to be 1 5 percent of 2011 credit sales 2012 Wrote off $40 of accounts receivable that were deemed uncollectible Provided $6,500 of services on account Collected $5,400 cash from accounts receivable Received $5 from a bad debt that had been previously written off Reinstated the account Recorded the $5 cash received from the receivable reinstated in Event No 4 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 Net Realizable Value, 2011 Net Realizable Value, 2011 Solo Company Balance Sheet Income Statement Assets Equity Rev 1 Exp Net Inc Note Int Ret Rec Rec Ear Statement of Cash Flows Event Cash Totals 2012 Babb Enterprises Balance Sheet Income Statement Assets Equity Rev 1 Exp Net Inc Note Int Ret Rec Rec Ear Statement of Cash Flows Event Cash Beg Balance Totals

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 31, 2024

Accounting for Uncollectible Receivables The Solo Company was started on January 1, 2011. The following events occurred during 2011 and 2012. 2011 Provided $4,000 of

Accounting for Uncollectible Receivables

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

2011

Provided $4,000 of services on account.
Collected $3,000 cash from accounts receivable.
Estimated uncollectible accounts expense to be 1.5 percent of 2011 credit sales.

2012

Wrote off $40 of accounts receivable that were deemed uncollectible.
Provided $6,500 of services on account.
Collected $5,400 cash from accounts receivable.
Received $5 from a bad debt that had been previously written off. Reinstated the account.
Recorded the $5 cash received from the receivable reinstated in Event No. 4.
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.

image text in transcribed

Net Realizable Value, 2011:

_____________________________________

Net Realizable Value, 2011:

_____________________________________

Solo Company Balance Sheet Income Statement Assets = Equity Rev. 1- Exp. = Net Inc. Note + Int. = Ret. Rec. Rec. Ear. Statement of Cash Flows Event Cash + Totals 2012 Babb Enterprises Balance Sheet Income Statement Assets = Equity Rev. 1- Exp. = Net Inc. Note + Int. = Ret. Rec. Rec. Ear. Statement of Cash Flows Event Cash + Beg. Balance Totals