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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

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.

Robert
(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:

6. Prepare entries in a general journal (page 4) for summary transactions (d) through (g) for Robert.
7. Post the entries to a general ledger for Robert, using the same accounts and numbers as were used for Sam.
8. Robert bases the estimate of uncollectible accounts on an aging schedule of accounts receivable. Using the following information, compute the estimated uncollectible amounts and make the appropriate adjusting entry in a general journal. Post the entry to the general ledger accounts on December 31, 20--.
Customers

Invoice Dates and Amounts for Unpaid Invoices

Beets, D. 10/7 $2,300 11/15 $1,200 12/18 $8,500
Cook, L. 6/1 1,200 8/15 2,500
Hylton, D. 9/23 4,300 10/22 2,500 12/23 2,800
Martin, D. 10/15 5,400 11/12 3,200 12/15 1,500
Stokes, D. 9/9 200 12/15 9,500
Taylor, T. 11/20 400 12/10 1,400
Thomas, O. 12/2 5,500
Tower, R. 12/15 2,300
Williams, G. 11/18 2,800 12/8 8,000

All sales are billed n/30. The following aging chart is used to estimate the uncollectibles using the percentage of receivables method:

Estimated Percent
Age Interval Uncollectible
Not yet due 2%
130 days 5
3160 days 10
6190 days 25
91120 days 50
Over 120 days 80
9. Compute the net realizable value of Roberts accounts receivable on December 31, 20--.

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