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 $2,180 cash in full payment of Arlenes account.
Apr.	3	Wrote off the $12,490 balance owed by Premier GS Co., which is bankrupt.
July	16	Received 35% of the $22,400 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible.
Nov.	23	Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,555 cash in full payment.
Dec.	31	Wrote off the following accounts as uncollectible (one entry): Cavey Co., $9,395; Fogle Co., $2,790; Lake Furniture, $7,170; Melinda Shryer, $2,025.
	31	Based on an analysis of the $1,106,300 of accounts receivable, it was estimated that $48,100 will be uncollectible. Journalized the adjusting entry.

Required:

1. Record the January 1 credit balance of $45,800 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 $1,106,300 balance in accounts receivable reflects the adjustments made during the year.

Jan. 19-reinstate	Accounts Receivable-Arlene Gurley	fill in the blank 158858f7e06b031_2	fill in the blank 158858f7e06b031_3
	Allowance for Doubtful Accounts	fill in the blank 158858f7e06b031_5	fill in the blank 158858f7e06b031_6
Jan. 19-collection	Cash	fill in the blank 158858f7e06b031_8	fill in the blank 158858f7e06b031_9
	Accounts Receivable-Arlene Gurley	fill in the blank 158858f7e06b031_11	fill in the blank 158858f7e06b031_12
Apr. 3	Allowance for Doubtful Accounts	fill in the blank 158858f7e06b031_14	fill in the blank 158858f7e06b031_15
	Accounts Receivable-Premier GS Co.	fill in the blank 158858f7e06b031_17	fill in the blank 158858f7e06b031_18
July 16	Cash	fill in the blank 158858f7e06b031_20	fill in the blank 158858f7e06b031_21
	Allowance for Doubtful Accounts	fill in the blank 158858f7e06b031_23	fill in the blank 158858f7e06b031_24
	Accounts Receivable-Hayden Co.	fill in the blank 158858f7e06b031_26	fill in the blank 158858f7e06b031_27
Nov. 23-reinstate	Accounts Receivable-Harry Carr	fill in the blank 158858f7e06b031_29	fill in the blank 158858f7e06b031_30
	Allowance for Doubtful Accounts	fill in the blank 158858f7e06b031_32	fill in the blank 158858f7e06b031_33
Nov. 23-collection	Cash	fill in the blank 158858f7e06b031_35	fill in the blank 158858f7e06b031_36
	Accounts Receivable-Harry Carr	fill in the blank 158858f7e06b031_38	fill in the blank 158858f7e06b031_39
Dec. 31-write-off	Allowance for Doubtful Accounts	fill in the blank 158858f7e06b031_41	fill in the blank 158858f7e06b031_42
	Accounts Receivable-Cavey Co.	fill in the blank 158858f7e06b031_44	fill in the blank 158858f7e06b031_45
	Accounts Receivable-Fogle Co.	fill in the blank 158858f7e06b031_47	fill in the blank 158858f7e06b031_48
	Accounts Receivable-Lake Furniture	fill in the blank 158858f7e06b031_50	fill in the blank 158858f7e06b031_51
	Accounts Receivable-Melinda Shryer	fill in the blank 158858f7e06b031_53	fill in the blank 158858f7e06b031_54
Dec. 31-adjusting	Bad Debt Expense	fill in the blank 158858f7e06b031_56	fill in the blank 158858f7e06b031_57
	Allowance for Doubtful Accounts	fill in the blank 158858f7e06b031_59	fill in the blank 158858f7e06b031_60

Feedback

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.

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

Allowance for Doubtful Accounts
Apr. 3	fill in the blank b85e58031066fd8_2	Jan. 1 Balance	fill in the blank b85e58031066fd8_3
July 16	fill in the blank b85e58031066fd8_5	Jan. 19	fill in the blank b85e58031066fd8_7
Dec. 31	fill in the blank b85e58031066fd8_9	Nov. 23	fill in the blank b85e58031066fd8_11
		Dec. 31 Unadjusted Balance	fill in the blank b85e58031066fd8_13
		Dec. 31 Adjusting Entry	fill in the blank b85e58031066fd8_15
		Dec. 31 Adjusted Balance	fill in the blank b85e58031066fd8_16

Bad Debt Expense
Dec. 31 Adjusting Entry	fill in the blank b85e58031066fd8_18

Feedback

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.

3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). $fill in the blank f9d5df03d04ffe0_1

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 $6,830,000 for the year, determine the following:

a. Bad debt expense for the year. $fill in the blank f9d5df03d04ffe0_2

b. Balance in the allowance account after the adjustment of December 31. $fill in the blank f9d5df03d04ffe0_3

c. Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). $fill in the blank f9d5df03d04ffe0_4