Entries Related to Uncollectible Accounts The following transactions were completed by The Spencer Gallery during the current fiscal year ended December 31: Mar. 15. Reinstated the account of Brad Atwell, which had been written off in the preceding year as uncollectible. Journalized the receipt of $2,165 cash in full payment of Brads account. May 20. Wrote off the $12,410 balance owed by Glory Rigging Co., which is bankrupt. Aug. 13. Received 45% of the $22,300 balance owed by Coastal Co., a bankrupt business, and wrote off the remainder as uncollectible. Sept. 2. Reinstated the account of Lorie Kidd, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,530 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Kimbro Co., $9,330; McHale Co., $2,770; Summit Furniture, $7,125; Wes Riggs, $2,015. Dec. 31. Based on an analysis of the $1,099,400 of accounts receivable, it was estimated that $47,800 will be uncollectible. Journalized the adjusting entry. Required:

1. Record the January 1 credit balance of $45,500 in a T account (below) for Allowance for Doubtful Accounts

2. a.Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $1,099,400 balance in accounts receivable reflects the adjustments made during the year

2. b. Post each entry that affects the following T accounts and determine the new balances:

Allowance for Doubtful Accounts
SelectMar. 15May 20Sept. 2Correct 1 of Item 2		Jan. 1 Balance
SelectMar. 15Aug. 13Sept. 2Dec. 31 Adjusting EntryCorrect 4 of Item 2		SelectMar. 15May 20Aug. 13Correct 6 of Item 2
SelectMar. 15Sept. 2Dec. 31Dec. 31 Adjusting EntryCorrect 8 of Item 2		SelectMay 20Aug. 13Sept. 2Correct 10 of Item 2
		SelectMay 20Aug. 13Dec. 31 Unadjusted BalanceCorrect 12 of Item 2
		SelectMay 20Aug. 13Dec. 31 Adjusting EntryCorrect 14 of Item 2
		Dec. 31 Adjusted Balance

Bad Debt Expense
SelectDec. 31 Adjusting EntryDec. 31 Unadjusted BalanceCorrect 17 of Item 2

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Solution

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 net sales of $6,790,000 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). $