Question
Renee Spa had the following balances at December 31, Year 1: Cash of $20,000, Accounts Receivable of $81,000, Allowance for Doubtful Accounts of $2,400, and
Renee Spa had the following balances at December 31, Year 1: Cash of $20,000, Accounts Receivable of $81,000, Allowance for Doubtful Accounts of $2,400, and Retained Earnings of $98,600. During Year 3, $2,600 of accounts receivable were written off as uncollectible. In addition, Renee unexpectedly collected $170 of receivables that had been written off in a previous accounting period. Services provided on account during Year 3 were $214,000, and cash collections from receivables were $215,963. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.
Required
a. Organize the transaction data in accounts under an accounting equation.
b. Based on the preceding information, compute (after year-end adjustment):
- (1) Balance of Allowance for Doubtful Accounts on December 31, Year 3.
- (2) Balance of Accounts Receivable on December 31, Year 3.
- (3) Net realizable value of Accounts Receivable on December 31, Year 3.
- c. What amount of uncollectible accounts expense will Renee Spa have for Year 3?
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