ACCOUNTING

Problem: Module 2 Textbook Problem 4 Learning Objective: 2-2 Use the percent of revenue method to account for uncollectible accounts expense The accounts receivable balance for Renue Spa at December 31, Year 1, was $89,000. Also on that date, the balance in the Allowance or Doubtful Accounts was $2,500. Total retained earnings at the end of Year 1 was $86,500. During Year 2,$2,700 of accounts eceivable were written off as uncollectible. In addition, Renue unexpectedly collected $140 of receivables that had been written off in a previous accounting period. Services provided on account during Year 2 were $220,000, and cash collections from receivables were $222,018. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Required a. Organize the information in accounts under an accounting equation. b. Based on the preceding information, compute (after year-end adjustment): 1. (1) Balance of Allowance for Doubtful Accounts at December 31, Year 2. 2. (2) Balance of Accounts Receivable at December 31, Year 2. 3. (3) Net realizable value of Accounts Receivable at December 31, Year 2. c. What amount of uncollectible accounts expense will Renue Spa record for Year 2? Answer is not complete. Complete this question by entering your answers in the tabs below. Organize the information in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.) Complete this question by entering your answers in the tabs below. Based on the preceding information, compute (after year-end adjustment): (1) Balance of Allowance for Doubtful Accounts at December 31, Year 2. (2) Balance of Accounts Receivable at December 31, Year 2. (3) Net realizable value of Accounts Receivable at December 31, Year 2. What amount of uncollectible accounts expense will Renue Spa record for Year 2