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Renue Spa had the following balances as of December 31, Year 1: Accounts receivable was $81,000, allowance for doubtful accounts was $2,900 and total retained
Renue Spa had the following balances as of December 31, Year 1: Accounts receivable was $81,000, allowance for doubtful accounts was $2,900 and total retained earnings at the end of Year 1 was $78,100. During Year 2 the company experienced the following events: 1. Accounts receivable in the amount of $2,500 were written off as uncollectible. 2 . Collected $180 of recelvables that had been written off in a previous accounting period. 3. Provided $219,000 worth of services on account during Year 2. 4. Cash collections from recelvables were $221,009 during Year 2 . 5. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Required a. Organize the information in accounts under an accounting equation. b. Based on the preceding information, compute (after year-end adjustment): 1. Balance of allowance for doubtful accounts at December 31, Year 2. 2. Balance of accounts receivable at December 31 , Year 2. 3. Net realizable value of accounts recelvable at December 31 , Year 2. c. What amount of uncollectible accounts expense will Renue Spa record for Year 2
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