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 $1,780 cash in full payment of Arlene's account. Apr. 3. Wrote off the $10,200 balance owed by Premier GS Co., which is bankrupt. July 16. Received 35% of the $18,300 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. Nov. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,900 cash in full payment. 23. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $7,570; Fogle Co., $2,280 ; Lake Furniture, $ 5,855; Melinda Shryer, $1,655. Dec. 31. Based on an analysis of the $903,900 of accounts receivable, it was estimated that $39,300 will be uncollectible. Journalize the adjusting entry. Required: 1. Record the January 1 credit balance of $37,400 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 $903,900 balance in accounts receivable reflects the adjustments made during the year. Jan. 19-reinstate Accounts Receivable-Arlene Gurley 1,780 Allowance for Doubtful Accounts 1,780 Jan. 19-collection Cash 1,780 Accounts Receivable-Arlene Gurley 1,780 Apr. 3 Allowance for Doubtful Accounts 10,200 Accounts Receivable-Premier GS Co. 10,200 July 16 Cash 6,405 Allowance for Doubtful Accounts 11,895 Accounts Receivable-Hayden Co. 18,300 Dec. 31-write-off 17,460 7,670 Allowance for Doubtful Accounts Accounts Receivable-Cavey Co. Accounts Receivable-Fogle Co. Accounts Receivable-Lake Furniture Accounts Receivable-Melinda Shryer 2,280 5,855 > 1,655 X Dec. 31-adjusting Bad Debt Expense v Allowance for Doubtful Accounts 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 A In such cases where an account receivable that has been written off is later collected, the account is rein as payment for the account. The amount of bad debt expense is affected by the balance in the allowance account. Learning Objective 4. 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Apr. 3 10,200 Jan. 1 Balance 37,400 July 16 11,895 Jan. 19 1,780 Dec. 31 17,460 Nov. 23 2,900 Dec. 31 Unadjusted Balance X Dec. 31 Adjusting Entry Dec. 31 Adjusted Balance Dec. 31 Unadjusted Balance Dec. 31 Adjusting Entry Dec. 31 Adjusted Balance Bad Debt Expense Dec. 31 Adjusting 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. Learning Objective 4. 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 $5,580,000 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)