QUESTION 1 (29 marks)

All transactions below relate to Parsons Builders Ltds doubtful accounts for the fiscal year ended June 30, 2019.

2018

July 18 Wrote off the $561 account of J. Brooks as uncollectible.

Oct. 19 Re-established the account of J. Fuller and recorded the collection of $1,562 in full payment of his account, which had been written off previously in 2016.

2019

Jan 31 Received 40% of the $990 balance owed by W. Chan and wrote off the remainder as uncollectible.

Feb 16 Wrote off as uncollectible the balance of Foxon, $2,640 and D. Ferres, $3,465 accounts. Foxon declared bankruptcy while Ferres had passed away.

March 20 Received 25% of the $1,716 owed by XL Painters and wrote off the remainder as a bad debt.

April. 16 Received $1.056 from D. Lowe in full payment of his account, which had been written off earlier as uncollectible.

June 30 Estimated bad debts expense for the year to be 1.5% of net credit sales of $631,000

Additional information:

Accounts Receivable, June 30, 2019---------------------------- $ 189,200

Allowance for Doubtful Account, July1, 2018------------------- $ 9,300 Cr

Required:

a) Prepare journal entries for each of the transactions. (21 marks)

b) Determine

(1) the balance in the Allowance for Doubtful Account after the June 30 adjustment. (2 marks)

(2) the net realizable value of the accounts receivable as at June 30, 2019. (2 marks)

c) Assume that instead of basing the allowance for doubtful account on net credit sales, the estimate of uncollectible accounts is based on an aging of accounts receivable and that $11,630 of the accounts receivable as at June 30 was estimated to be uncollectible. Determine:

(1) the general journal entry to bring the allowance account to the desired balance. (2 marks)

(2) the net realizable value of the accounts receivable as at June 30. (2 marks)