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 $2,005 cash in full payment of Arlene's account. Apr. 3. Wrote off the $11,490 balance owed by Premier GS Co., which is bankrupt. July 16. Received 40% 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 $3,270 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $8,640 ; Fogle Co., $2,565; Lake Furniture, $ 6,595; Melinda Shryer, $1,865. Dec. 31. Based on an analysis of the $1,016,600 of accounts receivable, it was estimated that $44,200 will be uncollectible. Journalized the adjusting entry. Required: 1. Record the January 1 credit balance of $42,100 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 $1,016,600 balance in accounts receivable reflects the adjustments made during the year. Jan. 19 Accounts Receivable-Arlene Gurley 2,005 Allowance for Doubtful Accounts 2,005 Jan. 19 Cash 2,005 Accounts Receivable-Arlene Gurley 2,005 Apr. 3 Allowance for Doubtful Accounts 12,750 Accounts Receivable-Premier GS Co. JI JI JI JI 10 I3 II II III II 12,750 July 16 Cash 8,240 Allowance for Doubtful Accounts 12,360 Accounts Receivable-Hayden Co. 20,600 Nov. 23 Accounts Receivable-Harry Carr 3,270 Allowance for Doubtful Accounts 3,270 Nov. 23 Cash 3,270 Accounts Receivable-Harry Carr 3,720 19,665 Dec. 31 Allowance for Doubtful Accounts Accounts Receivable-Cavey Co. 8,640 Accounts Receivable-Fogle Co. 2,565 Accounts Receivable-Lake Furniture 6,595 llll II Accounts Receivable-Melinda Shryer 1,865 Dec. 31 Bad Debt Expense 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 12,750 Jan. 1 Balance 42,100 July 16 12,360 Jan. 19 2,005 Dec. 31 19,665 Nov. 23 3,720 Dec. 31 Unadjusted Balance Dec. 31 Adjusting Entry 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). 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 $6,280,000 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)
