Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31: Feb. 8 Received 30% of the $18,900 balance

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31: Feb. 8 Received 30% of the $18,900 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible. May 27 Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,265 cash in full payment of Seths account. Aug. 13 Wrote off the $6,410 balance owed by Kat Tracks Co., which has no assets. Oct. 31 Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,980 cash in full payment of the account. Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,090; Bonneville Co., $5,485; Crow Distributors, $9,415; Fiber Optics, $1,190. Dec. 31 Based on an analysis of the $1,774,000 of accounts receivable, it was estimated that $35,480 will be uncollectible. Journalized the adjusting entry. Required: 1. Record the January 1 credit balance of $25,795 in a T account for Allowance for Doubtful Accounts. 2. A. Journalize the transactions. For the December 31 adjusting entry, assume the $1,774,000 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 net sales of $18,660,000 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
The Irvine Company
General Ledger
ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable-DeCoy Co.
122 Accounts Receivable-Seth Nelsen
123 Accounts Receivable-Kat Tracks Co.
124 Accounts Receivable-Crawford Co.
125 Accounts Receivable-Newbauer Co.
126 Accounts Receivable-Bonneville Co.
127 Accounts Receivable-Crow Distributors
128 Accounts Receivable-Fiber 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 Irvine, Capital
311 Irvine, 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

T Accounts

1. Record the January 1 credit balance of $25,795 in a T account for Allowance for Doubtful Accounts.
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.
Allowance for Doubtful Accounts
Jan. 1 Balance
Dec. 31 Adj. Balance
Bad Debt Expense

Journal

2. A. Journalize the transactions. For the December 31 adjusting entry, assume the $1,774,000 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.

PAGE 10

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Final Questions

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 net sales of $18,660,000 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. $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investment Grade Energy Audit Making Smart Energy Choices

Authors: Shirley J. Hansen, James W. Brown

1st Edition

0824709284, 978-0824709280

More Books

Students also viewed these Accounting questions

Question

6. How do histories influence the process of identity formation?

Answered: 1 week ago