Sam and Robert are identical twins. They opened identical businesses and experienced identical transactions. However, they decided to estimate uncollectible accounts in different ways. Sam elected to use the percentage of sales method, and Robert elected to use the percentage of receivables method. Listed below are the beginning balances of Cash, Accounts Receivable, and Allowance for Doubtful Accounts [items (a)(c)], and summary transactions that occurred during the year [items (d)(g)] for both businesses. Remember, both businesses experienced the same events: credit sales, collections of receivables, and write-offs. The only difference between the businesses is the method of estimating uncollectible accounts.

Sam

(a) Balance of Cash, January 1, 20--

$300,000

(b) Balance of Accounts Receivable, January 1

50,000

(c) Balance of Allowance for Doubtful Accounts, January 1

5,000

(d) Sales on account during 20--

550,000

(e) Collections on account during 20--

530,000

(f) Uncollectible accounts written off during 20--

4,500

(g) Collections made on accounts written off during 20--

500

Required:

	1. Beginning balances (items (a) through (c)) in general ledger accounts for Sam are given.
	2. Prepare entries in a general journal (page 4) for summary transactions (d) through (g) for Sam.
	3. Post the entries to a general ledger for Sam, using the following accounts and numbers.

Cash	101
Accounts Receivable	122
Allowance for Doubtful Accounts	122.1
Sales	401
Bad Debt Expense	532

	4. Sam estimates that 1% of all sales on account will be uncollectible. Calculate the estimated bad debt expense and make the appropriate adjusting entry in a general journal. Post the entry to the general ledger accounts on December 31, 20--.
	5. Compute the net realizable value of Sams accounts receivable on December 31, 20--.

CHART OF ACCOUNTS

Company Sam

General Ledger

	ASSETS
101	Cash
122	Accounts Receivable
122.1	Allowance for Doubtful Accounts
141	Supplies
145	Prepaid Insurance
181	Office Equipment
181.1	Accumulated Depreciation-Office Equipment

	LIABILITIES
202	Accounts Payable
219	Wages Payable

	EQUITY
311	Owner's Capital
312	Owner's Drawing

	REVENUE
401	Sales

	EXPENSES
511	Wages Expense
512	Advertising Expense
521	Rent Expense
523	Supplies Expense
525	Phone Expense
532	Bad Debt Expense
535	Insurance Expense
541	Depreciation Expense-Office Equipment
549	Miscellaneous Expense

Prepare entries in a general journal (page 4) for summary transactions (d) through (g) for Sam on December 31.

General Journal Instructions

PAGE 4

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10

4. Sam estimates that 1% of all sales on account will be uncollectible. Calculate the estimated bad debt expense and make the appropriate adjusting entry on December 31.

PAGE 4

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1		Adjusting Entries
2
3

. Beginning balances (items (a) through (c)) in general ledger accounts for Sam are given.

3. Post entries (d) through (g) to general ledger accounts for Sam.

4. Post the adjusting entry to general ledger accounts for Sam.

General Ledger Instructions

GENERAL LEDGER

Account: Cash101Account No.

	DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
						DEBIT	CREDIT
1	Jan. 1	Balance				300,000.00
2
3

Account: Accounts Receivable122Account No.

	DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
						DEBIT	CREDIT
1	Jan. 1	Balance				50,000.00
2
3
4
5
6

Account: Allowance for Doubtful Accounts122.1Account No.

DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
					DEBIT	CREDIT
1	Jan. 1	Balance					5,000.00
2
3
4

Account: Sales401Account No.

DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
					DEBIT	CREDIT
1

Account: Bad Debt Expense532Account No.

DATE	ITEM	POST. REF.	DEBIT	CREDIT	BALANCE
					DEBIT	CREDIT
1

5. Compute the net realizable value of Sams accounts receivable on December 31, 20--.

$..........................

I will need help with General Journal, General Ledger and Analysis. Thank you!