Entries Related to Uncollectible Accounts The following transactions were completed by The 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 $2,075 cash in full payment of Arlene's account. Apr. 3. Wrote off the $11,890 balance owed by Premier GS Co., which is bankrupt. July 16. Received 35% of the $21,300 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of Nov. 23. $3,380 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$8,945; Fogle Co., $2,655; Lake Furniture, $6,825; Melinda Shryer, $1,930. Based on an analysis of the $1,053,400 of accounts receivable, it was estimated that $45,800 will be uncollectible. Journalized Dec. 31. the adjusting entry. Required: 1. Record the January 1 credit balance of $43,600 in a T account presented below in requirement 2b 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 $1,053,400 balance in accounts receivable reflects the adjustments made during the year. Jan. 19-reinstate Accounts Receivable-Arlene Gurley 2,075 Allowance for Doubtful Accounts 2,075 Jan. 19-collection Cash 2,075 Accounts Receivable-Arlene Gurley 2,075 Apr. 3 Allowance for Doubtful Accounts 11,890 Accounts Receivable-Premier GS Co. 11,890 July 16 Cash 7,455 13,845 Allowance for Doubtful Accounts Accounts Receivable-Hayden Co. 21,300 Nov. 23-reinstate Accounts Receivable-Harry Carr 3,380 Allowance for Doubtful Accounts 3,380 3,380 Nov. 23-collection Cash Accounts Receivable-Harry Carr 3,380 20,355 Dec. 31-write-off Allowance for Doubtful Accounts Accounts Receivable-Cavey Co. 8,945 Accounts Receivable-Fogle Co. 2,655 Accounts Receivable-Lake Furniture 6,825 Accounts Receivable-Melinda Shryer 1,930 51,545 x Dec. 31-adjusting Bad Debt Expense Allowance for Doubtful Accounts 51,545 x Feedback 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Apr. 3 11,890 jan. 1 Balance 43,600 July 16 13,845 Jan. 19 2,075 Dec. 31 20,355 Nov. 23 3,380 Dec. 31 Unadjusted Balance 49,055 X Dec. 31 Adjusting Entry 49,055 x Dec. 31 Adjusted Balance 49,055 X Bad Debt Expense Dec. 31 Adjusting Entry 49,055 X 3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). 1,007,600 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 $6,500,000 for the year, determine the following: a. Bad debt expense for the year. 32,500 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)
