Chapter 08 Homework eBook Show Me How Calculator Pri tem 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 $1,645 cash in full payment of Arlene's account. Apr. 3. Wrote off the $9,540 balance owed by Premier GS Co., which is bankrupt. July 16. Received 35% of the $17,100 balance owed by Hayden Co, a bankrupt business, and wrote off the remainder as uncollectible Nov. 23. Reinstated the account of Harry Care, which had been written off two years earlier as uncollectible. Recorded the receipt of $2.715 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., 87,175: Pogle Co., $2,130 : Lake Furniture, 55,480 ; Melinda Shryer, 51,550. Dec. 31. Based on an analysis of the $846,400 of accounts receivable, it was estimated that $36,800 will be uncollectible. Journalized the adjusting entry Requiredi 1. Record the January 1 credit balance of $35,000 in aT account presented below in recurement 2 for Alowance for Doubtful Accounts. 2... Journalize the transactions. If an amount box does not require an entry, leave a blank. Note: Her the December 31 adjusting entry, mume the S6400 bwance in accounts receivable reflects the adjustments made during the year, Jan. 19 Accounts Receivable-Arlene Gurley Allowance for Doubtful Accounts Jan. 19 Cash Accounts Receivable-Arlene Gurley 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Jan. 1 Balance Dec. 31 Adjusted Balance Bad Debt Expense The My W 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 Printem 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 of 1% of the sales of $5,230,000 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) Check My Work Remember that net realizable value is the amount that is expected to be collected or realized. The analysis of receivables method places more emphasis on the net mearable value of the receivables and, thus, emphasizes the balance sheet. That is the amount of the adjusting entry is the amount that will yield an adjusted balance for Allowance for Doubtful Accounts equal that estimated by the aging schedule The analysis of receivables method is based on the assumption that the longer an account receivable is outstanding the less likely that it will be collected