At the beginning of the current period, Emler Corp. had balances in Accounts Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000 (credit). During the period, it had net credit sales of $800,000 and collections of $763,000. It wrote off as uncollectible accounts receivable of $7,000. However, a $3,000 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $25,000 at the end of the period.
| (a) | Prepare the entries to record sales and collections during the period. |
| Account/Description | Debit | Credit |
| Service charge expenseSales returns and allowancesInterest receivableSalesInterest expenseSales discountsBad debts expenseAccounts receivableCashAllowance for doubtful accountsNotes receivable | | |
| CashAccounts receivableInterest receivableSalesSales discountsNotes receivableAllowance for doubtful accountsBad debts expenseSales returns and allowancesService charge expenseInterest expense | | |
| (To record the sales.) | | |
| Accounts receivableSales discountsSales returns and allowancesSalesInterest expenseService charge expenseBad debts expenseNotes receivableCashAllowance for doubtful accountsInterest receivable | | |
| Sales returns and allowancesService charge expenseNotes receivableInterest expenseAccounts receivableInterest receivableSales discountsBad debts expenseSalesCashAllowance for doubtful accounts | | |
| (To record the collections.) | | |
| (b) | Prepare the entry to record the write-off of uncollectible accounts during the period. |
| Account/Description | Debit | Credit |
| SalesSales discountsAccounts receivableBad debts expenseAllowance for doubtful accountsService charge expenseCashSales returns and allowancesInterest expenseInterest receivableNotes receivable | | |
| Service charge expenseSales returns and allowancesSales discountsCashBad debts expenseInterest expenseInterest receivableNotes receivableAccounts receivableAllowance for doubtful accountsSales | | |
| (c) | Prepare the entries to record the recovery of the uncollectible account during the period. |
| Account/Description | Debit | Credit |
| Sales discountsBad debts expenseNotes receivableSales returns and allowancesSalesCashService charge expenseInterest expenseAccounts receivableAllowance for doubtful accountsInterest receivable | | |
| Service charge expenseBad debts expenseCashInterest receivableInterest expenseSalesAccounts receivableAllowance for doubtful accountsNotes receivableSales discountsSales returns and allowances | | |
| (To reinstate the account receivable.) | | |
| Notes receivableSalesSales discountsAccounts receivableBad debts expenseCashInterest receivableSales returns and allowancesService charge expenseAllowance for doubtful accountsInterest expense | | |
| Bad debts expenseSalesSales returns and allowancesSales discountsInterest expenseNotes receivableService charge expenseInterest receivableAccounts receivableAllowance for doubtful accountsCash | | |
| (To record the collection.) | | |
| (d) | Prepare the entry to record bad debts expense for the period. |
| Account/Description | Debit | Credit |
| Allowance for doubtful accountsBad debts expenseSales returns and allowancesInterest expenseInterest receivableSalesNotes receivableCashSales discountsAccounts receivableService charge expense | | |
| SalesNotes receivableBad debts expenseCashSales discountsAccounts receivableInterest receivableInterest expenseSales returns and allowancesService charge expenseAllowance for doubtful accounts | | |
| (e) | Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts. |
| Accounts receivable | $ |
| Allowance for doubtful accounts | $ |
| (f) | What is the net realizable value of the receivables at the end of the period? |
| | |
| | $ |
