Instructions The following transactions were completed by Irvine Company during the current fiscal year ended December 31: Feb. 8 Received 40% of the $17,000 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible. May 27 Aug. 13 Oct. 31 Reinstated the account of Seth Nelsen, which had been written off in the preceding year as un collectible. Journalized the receipt of $7,405 cash in full payment of Seth's account. Wrote off the $6,460 balance owed by Kat Tracks Co., which has no assets. Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,940 cash in full payment of the account. Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,095, Bonneville Co., 85,540; Crow Distributors, 59,495; Fiber Optics, $1,035. Based on an analysis of the $1,782,000 of accounts receivable, it was estimated that $35,640 will be uncollectible, Journalized the adjusting entry. Dec. 31 1. Record the January 1 credit balance of $25,615 in a T-account for Allowance for Doubtful Accounts. 2. A. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. B. Post each entry that affects the following selected T-accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense. 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 1 of 1% of the net sales of $17,760,000 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. Journal 2. A. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL DATE POST. REF. DEBIT ACCOUNTING FOLIATION ASSETS ABILITIES EQUITY CREDIT Feb. 8 DESCRIPTION Cash Allowance for Doubtful Accounts May 27 Accounts Receivable-Decoy Co. Accounts Receivable-Seth Nelsen Allowance for Doubtful Accounts May 27 Cash Accounts Receivable-Seth Nelsen Aug. 13 Allowance for Doubtful Accounts Accounts Receivable-Kat Tracks Co. Oct. 31 Accounts Receivable-Crawford Co. Allowance for Doubtful Accounts Cash Oct 31 Accounts Receivable-Crawford Co. Dec. 31 Allowance for Doubtful Accounts Accounts Receivable-Newbauer Co. Dec 31 Bad Debt Expense Allowance for Doubtful Accounts T-Accounts 1. Record the January 1 credit balance of $25,615 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 Accounts and Bad Debt Expense. Allowance for Doubtful Accounts Feb. 8 10,200 Jan. 1 Balance 25,615 7,405 Aug. 13 6,460 May 27 Dec. 31 23,165 Oct. 31 3,940 Dec. 31 Adjusting Entry L 38,505 Dec. 31 Unadjusted Balance Dec. 31 Adj. Balance Bad Debt Expense Dec. 31 Adjusting Entry 38,505
