allowance method entries 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 $2,385 cash in full payment of Arlene's account. Apr. 3. Wrote off the $13,670 balance owed by Premier GS Co., which is bankrupt. . July 16. Received 30% of the $24,500 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 $3,890 cash in full payment. Dec. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $10,280 ; Fogle Co., $3,055; Lake Furniture, $ 7,845 ; Melinda Shryer, $2,220. 31. Dec. 31. Based on an analysis of the $1,209,800 of accounts receivable, it was estimated that $52,600 will be uncollectible. Journalized the adjusting entry. Required: 1. Record the January 1 credit balance of $50,100 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 $1,209,800 balance in accounts receivable reflects the adjustments made During the year. . Jan. 19 Accounts Receivable-Arlene Gurley 2,385 Allowance for Doubtful Accounts 2,385 Jan. 19 Cash 2,385 Accounts Receivable-Arlene Gurley 2.35 Apr. 3 13,670 Allowance for Doubtful Accounts Accounts Receivable-Premier GS Co. 13.670 7.350 July 16 Cash Allowance for Doubtful Accounts Accounts Receivable-Hayden Co. 17.150 24,500 3,890 Nov. 23 Accounts Receivable-Harry Carr Allowance for Doubtful Accounts 3.890 3,890 Nov. 23 Cash Accounts Receivable-Harry Carr 3,890 Dec. 31 Allowance for Doubtful Accounts 23,400 10.20 3,055 Accounts Receivable-Cavey Co. Accounts Receivable-Fogle Co. Accounts Receivable-Lake Furniture Accounts Receivable-Melinda Shryer 7,845 2.220 Dec. 31 Bad Debt Expense 50,445 Allowance for Doubtful Accounts 50,445 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Apr. 3 50,100 July 16 13,670 an. 1 Balance 17,150 Jan. 19 23,400 Nov. 23 - 2,385 Dec. 31 3,890 Y Dec. 31 Unadjusted Balance Dec. 31 Adjusting Entry Dec. 31 Adjusted Balance Bad Debt Expense Dec. Ainsing Entry Feedback Check My Work Set up T accounts. Recall that under the allowance method, the entry to write off an account debits Allowance for Doubtful Accounts and credits Accounts Receivable. In such cases where an account receivable that has been written off is later collected, the account is reinstated by an entry that reverses the write-off entry. Then record the receipt of cash as payment for the account. The amount of bad debt expense is affected by the balance in the allowance account. 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 $7,470,000 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)
