The following transactions were completed by Daws Company during the current fiscal year ended December 31:
| Jan. 29 | Received 35% of the $18,100 balance owed by Kovar Co., a bankrupt business, and wrote off the remainder as uncollectible. |
| Apr. 18 | Reinstated the account of Spencer Clark, which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,300 cash in full payment of Clarks account. |
| Aug. 9 | Wrote off the $6,350 balance owed by Iron Horse Co., which has no assets. |
| Nov. 7 | Reinstated the account of Vinyl Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,865 cash in full payment of the account. |
| Dec. 31 | Wrote off the following accounts as uncollectible (one entry): Beth Connelly Inc., $7,105; DeVine Co., $5,435; Moser Distributors, $9,390; Oceanic Optics, $1,075. |
| Dec. 31 | Based on an analysis of the $1,796,000 of accounts receivable, it was estimated that $35,920 will be uncollectible. Journalized the adjusting entry. |
| | Required: |
| 1. | Record the January 1 credit balance of $26,080 in a T account for Allowance for Doubtful Accounts. |
| 2. | | A. | Journalize the transactions. For the December 31 adjusting entry, assume the $1,796,000 balance in accounts receivable reflects the adjustments made during the year. Refer to the chart of accounts for a listing of the account titles the company uses. | | B. | Post each entry that affects the following selected T accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense. | |
| 3. | Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry). |
| 4. | Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables the adjusting entry on December 31 had been based on an estimated expense of of 1% of the sales of $18,260,000 for the year, determine the following: | A. | Bad debt expense for the year. | | B. | Balance in the allowance account after the adjustment of December 31. | | C. | Expected net realizable value of the accounts receivable as of December 31. | CHART OF ACCOUNTS | | Daws Company | | General Ledger | | | ASSETS | | 110 | Cash | | 111 | Petty Cash | | 121 | Accounts Receivable-Kovar Co. | | 122 | Accounts Receivable-Spencer Clark | | 123 | Accounts Receivable-Iron Horse Co. | | 124 | Accounts Receivable-Vinyl Co. | | 125 | Accounts Receivable-Beth Connelly Inc. | | 126 | Accounts Receivable-DeVine Co. | | 127 | Accounts Receivable-Moser Distributors | | 128 | Accounts Receivable-Oceanic Optics | | 129 | Allowance for Doubtful Accounts | | 131 | Interest Receivable | | 132 | Notes Receivable | | 141 | Merchandise Inventory | | 145 | Office Supplies | | 146 | Store Supplies | | 151 | Prepaid Insurance | | 181 | Land | | 191 | Store Equipment | | 192 | Accumulated Depreciation-Store Equipment | | 193 | Office Equipment | | 194 | Accumulated Depreciation-Office Equipment | | | LIABILITIES | | 210 | Accounts Payable | | 211 | Salaries Payable | | 213 | Sales Tax Payable | | 214 | Interest Payable | | 215 | Notes Payable | | | EQUITY | | 310 | Daws, Capital | | 311 | Daws, Drawing | | 312 | Income Summary | | | | REVENUE | | 410 | Sales | | 610 | Interest Revenue | | | EXPENSES | | 510 | Cost of Merchandise Sold | | 520 | Sales Salaries Expense | | 521 | Advertising Expense | | 522 | Depreciation Expense-Store Equipment | | 523 | Delivery Expense | | 524 | Repairs Expense | | 529 | Selling Expenses | | 530 | Office Salaries Expense | | 531 | Rent Expense | | 532 | Depreciation Expense-Office Equipment | | 533 | Insurance Expense | | 534 | Office Supplies Expense | | 535 | Store Supplies Expense | | 536 | Credit Card Expense | | 537 | Cash Short and Over | | 538 | Bad Debt Expense | | 539 | Miscellaneous Expense | | 710 | Interest Expense | | none X T Accounts Shaded cells have feedback. | 1. | Record the January 1 credit balance of $26,080 in a T account for Allowance for Doubtful Accounts The contra asset account for accounts receivable. . | | 2. | | B. | Post each entry that affects the following selected T accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense The operating expense incurred because of the failure to collect receivables. . | | 2. A. Journalize the transactions. For the December 31 adjusting entry, assume the $1,796,000 balance in accounts receivable reflects the adjustments made during the year. Refer to the chart of accounts for a listing of the account titles the company uses 
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JOURNAL Score: 155/249 ACCOUNTING EQUATION DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY DATE Jan. 29 Cash 6,335.00 11,765.00 Allowance for Doubtful Accounts 18,100.00 Accounts Receivable-Kovar Co. Apr. 18 Cash 7,300.00 Accounts Receivable-Spencer Clark 7,300.00 Aug. 9 Bad Debt Expense 6,530.00 Accounts Receivable-Iron Horse Co. 6,530.00 Nov. 7 Cash 3,865.00 Accounts Receivable-Vinyl Co. 3,865.00 Dec. 31 Bad Debt Expense 23,005.00 Allowance for Doubtful Accounts 23,005.00 Dec. 31 Bad Debt Expense 35,930.00 Income Summary 26,080.00 Bad Debt Expense 51,140.00 Dec. 31 Bad Debt Expense 77,220.00 Dec. 31 Bad Debt Expense 26,080.00 Bad Debt Expense 35,920.00 Bad Debt Expense 35,920.00 Bad Debt Expense 62,000.00 Bad Debt Expense 77,220.00
