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. Journalize the receipt of $2,030 cash in full payment of Arlene's account. Apr. 3. Wrote off the $11,630 balance owed by Premier GS Co., which is bankrupt. July 16. Received 40% of the $20,900 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 $3,310 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $8,750 ; Fogle Co., $2,600 ; Lake Furniture, $ 6,680 ; Melinda Shryer, $1,890. Dec. 31. Based on an analysis of the $1,028,100 of accounts receivable, it was estimated that $44,700 will be uncollectible. Journalize the adjusting entry. Required: 1. Record the January 1 credit balance of $42,600 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 $1,028,100 balance in accounts receivable reflects the adjustments made during the year. Jan. 19-reinstate Accounts Receivable-Arlene Gurley 2,030 Allowance for Doubtful Accounts 2,030 Jan. 19-collection Cash 2,030 Accounts Receivable-Arlene Gurley 2,030 Apr. 3 Allowance for Doubtful Accounts 11,630 Accounts Receivable-Premier GS Co. 11,630 July 16 Cash 8,360 Allowance for Doubtful Accounts 12,540 Accounts Receivable-Hayden Co. 20,900 Nov. 23-reinstate Accounts Receivable-Harry Carr 3,310 Allowance for Doubtful Accounts 3,310 3,310 Nov. 23-collection Cash Accounts Receivable-Harry Carr 3,310 Dec. 31-write-off Allowance for Doubtful Accounts 19,920 Accounts Receivable-Cavey Co. 8,750 Accounts Receivable-Fogle Co. 2,600 IIII Accounts Receivable-Lake Furniture 6,680 Accounts Receivable-Melinda Shryer 1,890 Dec. 31-adjusting Bad Debt Expense 44,700 X Allowance for Doubtful Accounts 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Apr. 3 11,630 Jan. 1 Balance 42,600 July 16 Jan. 19 2,030 Dec. 31 Nov. 23 3,310 Dec. 31 Unadjusted Balance Dec. 31 Adjusting Entry Dec. 31 Adjusted Balance Bad Debt Expense Dec. 31 Adjusting Entry 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 $6,350,000 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)
