Instructions Chart of Accounts The following transactions were completed by Irvine Company during the current fiscal year ended December 31: General Ledger Feb. 8 ASSETS REVENUE Received 40% of the $18,500 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible. 110 Cash 410 Sales May 27 610 Interest Revenue Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of 57,430 cash in full payment of Seth's account. 111 Petty Cash 121 Accounts Receivable-DeCoy Co. Aug. 13 Wrote off the $6,470 balance owed by Kat Tracks Co., which has no assets. 122 Accounts Receivable-Seth Nelsen EXPENSES Oct. 31 123 Accounts Receivable-Kat Tracks Co. 510 Cost of Goods Sold Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,870 cash in full payment of the account. Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., 57,245; Bonneville Co., 55,595; Crow Distributors, $9,500; Fiber Optics, S1,060. 124 Accounts Receivable-Crawford Co. 520 Sales Salaries Expense Dec. 31 125 Accounts Receivable-Newbauer Co. 521 Advertising Expense 522 Depreciation Expense-Store Equipment 126 Accounts Receivable-Bonneville Co. Dec. 31 Based on an analysis of the $1,769,500 of accounts receivable, it was estimated that $35,390 will be uncollectible. Journalized the adjusting entry. 127 Accounts Receivable-Crow Distributors 523 Delivery Expense 128 Accounts Receivable-Fiber Optics 524 Repairs Expense 129 Allowance for Doubtful Accounts 529 Selling Expenses 1. Record the January 1 credit balance of $25,330 in a T-account for Allowance for Doubtful Accounts. 131 Interest Receivable 530 Office Salaries Expense 2. A. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. 132 Notes Receivable 531 Rent Expense B. Post each entry that affects the following selected T-accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense. 141 Merchandise Inventory 532 Depreciation Expense-Office Equipment 533 Insurance Expense 145 Office Supplies 3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry) 146 Store Supplies 534 Office Supplies Expense 151 Prepaid Insurance 535 Store Supplies Expense 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 /4 of 1% of the net sales of $18,430,000 for the year, determine the following 181 Land 536 Credit Card Expense 191 Store Equipment 537 Cash Short and Over A. Bad debt expense for the year. 538 Bad Debt Expense 192 Accumulated Depreciation-Store Equipment 193 Office Equipment B. Balance in the allowance account after the adjustment of December 31. 539 Miscellaneous Expense C. Expected net realizable value of the accounts receivable as of December 31 194 Accumulated Depreciation Office Equipment 710 Interest Expense T-Accounts x Journal JOURNAL ACCOUNTING EQUATION 1. Record the January 1 credit balance of $25,330 in a T-account for Allowance for Doubtful Accounts. 2. B. Post each entry that affects the following selected T-accounts and determine the new balances: Allowance for Doubtful DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Accounts and Bad Debt Expense 2 3 Allowance for Doubtful Accounts 4 Jan. 1 Balance 5 6 7 8 Dec. 31 Adj. Balance 10 Bad Debt Expense 11 Afectangular Shije 12 13 14 15 16 17 18 19 Final Questions 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). $ 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 14 of 1% of the net sales of $18,430,000 for the year, determine the following: A. Bad debt expense for the year. S B. Balance in the allowance account after the adjustment of December 31. S C. Expected net realizable value of the accounts receivable as of December 31. S
