Adjustment for Uncollectible Accounts Below is the aging of receivables schedule for Evers Industries. Aging-of-Receivables Schedule November 30 1-30 Over 90 Not Past Days Past Due 31-60 Days Past Due 61-90 Days Past Due Days Past Due Customer Balance Due Subtotals 785,400 463,400 172,800 70,700 39,300 39,200 Boyd Industries 18,000 18,000 Hodges Company 21,000 21,000 Kent Creek Inc. 5,100 5,100 Lockwood Company 11,300 11,300 Van Epps Company 27,800 27,800 Totals 868,600 491,200 184,100 75,800 60,300 57,200 Percentage uncollectible 1% 5% 25% 35% 50% Allowance for Doubtful Accounts 82,772 4,912 9,205 18,950 21,105 28,600 Assume that the allowance for doubtful accounts for Evers Industries has a credit balance of $ 17,380 before adjustment on July 31. Journalize the adjusting entry for uncollectible accounts as of July 31. July 31 E 18 Estimating Doubtful Accounts Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows: Age Class Balance Percent Uncollectible Not past due $754,000 1/2 % 1-30 days past due 82,900 3 31-60 days past due 37,700 8 61-90 days past due 27,100 18 91-180 days past due 19,600 40 Over 180 days past due 14,300 80 $935,600 Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31. Percent Uncollectible Estimated Uncollectible Accounts Amount Age Class Balance Not past due $754,000 1/2% 1-30 days past due 82,900 3 31-60 days past due 37,700 8 61-90 days past due 27,100 18 91-180 days past due 19,600 40 Over 180 days past due 14,300 80 Total $935,600 The following transactions were completed by Wild Trout Gallery during the current fiscal year ended December 31: Jan. 19. Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $2,000 cash in full payment of Arlene's account. Apr. 3. Wrote off the $11,460 balance owed by Premier GS Co., which is bankrupt. July 16. Received 25% of the $20,600 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. Nov. 23. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,260 cash in full payment. Dec. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $8,620; Fogle Co., $2,560 ; Lake Furniture, $ 6,580 ; Melinda Shryer, $1,860. 31. Dec. Based on an analysis of the $1,014,300 of accounts receivable, it was estimated that $44,100 will be uncollectible. Journalized the adjusting entry. 31 Required: 1. Record the January 1 credit balance of $42,000 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts. 2. a. Journalize the transactions. If an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $1,014,300 balance in accounts receivable reflects the adjustments made during the year. Jan. 19 Jan. 19 Jan. 15 Apr. 3 July 16 II II III II II IL II II III II II IL Nov. 23 Nov. 23 Dec. 31 Dec. 31 Dec. 31 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Jan. 1 Balance Dec. 31 Adjusted Balance Bad Debt Expense 3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). s 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 $6,260,000 for the year, determine the following: a. Bad debt expense for the year. s 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)
