Question
Red Admiral Map Company's balance sheet at December 31, 2023, reported the following: LOADING... (Click the icon to view the data.)Read the requirements LOADING... .
Red Admiral
Map Company's balance sheet at
December
31,
2023,
reported the following:
LOADING...
(Click the icon to view the data.)Read the requirements
LOADING...
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Requirement 1. How much of the receivables did
Red Admiral
expect to collect? Stated differently, what was the net realizable value of these receivables?
| The net realizable value of these receivables is | 39500 | . |
Requirement 2. Journalize, without explanations,
2024
entries for
Red Admiral
and post to the Accounts Receivable and Allowance for Bad DebtsT-accounts.
Begin with the journal entries. (Record debits first, then credits. Exclude explanations from journal entries.)
a. Total credit sales for
2024
were
$120,000
(ignore Cost of Goods Sold).
| Date | Accounts and Explanation | Debit | Credit | ||
| 2024 |
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| (a) | Accounts Receivable | 120000 |
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| Sales Revenue |
| 120000 | ||
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b.
Red Admiral
received cash payments on account during
2024
of
$84,000.
| Date | Accounts and Explanation | Debit | Credit | ||
| 2024 |
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| (b) | Cash | 84000 |
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| Accounts Receivable |
| 84000 | ||
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c. Accounts receivable identified to be uncollectible totaled
$7,200.
| Date | Accounts and Explanation | Debit | Credit | ||
| 2024 |
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| (c) | Allowance for Bad Debts | 7200 |
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| Accounts Receivable |
| 7200 | ||
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Post to the Accounts Receivable and Allowance for Bad Debts T-accounts. The opening balances, as provided in the question, have been entered for you. Post the current year transactions you recorded above to these two accounts using the corresponding letters (a, b, c) as posting references. After posting, calculate the unadjusted balance of each account by selecting an "Unadj. Bal." posting reference and entering the unadjusted balance on the appropriate side of each account.
Review the journal entries you prepared above.
LOADING...
| Accounts Receivable |
| Allowance for Bad Debts | ||||||
| Jan. 1, 2024, Bal. | 45,000 | 84000 | (b) |
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| 5,500 | Jan. 1, 2024, Bal. | |
| (a) | 120000 | 7200 | (c) | (c) | 7200 |
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| Unadj. Bal. | 73800 |
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| Unadj. Bal. | 1700 |
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Requirement 3. Record the adjusting entry to recognize bad debts expense using the following independent situations, and then post to the Bad Debts Expense and Allowance for Bad Debts T-accounts.
a.
5%
of credit sales were estimated to be uncollectible. Begin by recording the adjusting entry to recognize bad debts expense. (Record debits first, then credits. Exclude explanations from journal entries.)
| Date | Accounts and Explanation | Debit | Credit | ||
| 2024 |
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| Dec. 31 | Bad Debts Expense | 6000 |
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| Allowance for Bad Debts |
| 6000 | ||
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a.
5%
of credit sales were estimated to be uncollectible. Enter the unadjusted balance of the Allowance for Bad Debts account from Requirement 2, along with an "Unadj. Bal." posting reference to the first line of the Allowance for Bad Debts T-account. Post the adjusting entry from the preceding step to the Allowance for Bad Debts and Bad Debts Expense T-accounts along with an "Adj." posting reference. After posting the entry, calculate the adjusted balance of the T-accounts and enter the adjusted balance, along with a
"Dec.
31,
2024,
Bal." posting reference to the appropriate side of each account.Review the allowance T-account that you posted to in Requirement 2.
LOADING...
| Allowance for Bad Debts |
| Bad Debts Expense | ||||||
| Unadj. Bal. | 73800 | 5500 |
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| 7200 |
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b. An aging of receivables indicates that
$3,600
of the receivables are estimated to be uncollectible. Begin by recording the adjusting entry to recognize bad debts expense. (Record debits first, then credits. Exclude explanations from journal entries.)Review the allowance T-account that you posted to in Requirement 2.
LOADING...
| Date | Accounts and Explanation | Debit | Credit | ||
| 2024 |
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| Dec. 31 |
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b. An aging of receivables indicates that
$3,600
of the receivables are estimated to be uncollectible. Enter the unadjusted balance of the Allowance for Bad Debts account from Requirement 2, along with an "Unadj. Bal." posting reference to the first line of the Allowance for Bad Debts T-account. Post the adjusting entry from the preceding step to the Allowance for Bad Debts and Bad Debts Expense T-accounts along with an "Adj." posting reference. After posting the entry, calculate the adjusted balance of the T-accounts and enter the adjusted balance, along with a
"Dec.
31,
2024,
Bal." posting reference to the appropriate side of each account.Review the allowance T-account that you posted to in Requirement 2.
LOADING...
| Allowance for Bad Debts |
| Bad Debts Expense | ||||||
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