Question
The following transactions were completed by Wild Trout Gallery during the current fiscal year ended December 31: Date Transaction January 19. Reinstated the account of
The following transactions were completed by Wild Trout Gallery during the current fiscal year ended December 31:
Date | Transaction |
---|---|
January 19. | Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,840 cash in full payment of Arlenes account. |
April 3. | Wrote off the $10,540 balance owed by Premier GS Co., which is bankrupt. |
July 16. | Received 25% of the $18,900 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. |
November 23. | Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,000 cash in full payment. |
December 31. | Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $7,930; Fogle Co., $2,355; Lake Furniture, $6,055; Melinda Shryer, $1,710. |
December 31. | Based on an analysis of the $931,500 of accounts receivable, it was estimated that $40,500 will be uncollectible. Journalized the adjusting entry. |
Required:
1. Record the January 1 credit balance of $38,600 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts.
Question Content Area
2. a. Journalize the transactions. If an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $931,500 balance in accounts receivable reflects the adjustments made during the year.
Date | Account | Debit | Credit |
---|---|---|---|
Jan. 19 | Accounts Receivable-Arlene Gurley | ||
Allowance for Doubtful Accounts | |||
Jan. 19 | Cash | ||
Accounts Receivable-Arlene Gurley | |||
Apr. 3 | Allowance for Doubtful Accounts | ||
Accounts Receivable-Premier GS Co. | |||
July 16 | Cash | ||
Allowance for Doubtful Accounts | |||
Accounts Receivable-Hayden Co. | |||
Nov. 23 | Accounts Receivable-Harry Carr | ||
Allowance for Doubtful Accounts | |||
Nov. 23 | Cash | ||
Accounts Receivable-Harry Carr | |||
Dec. 31 | Allowance for Doubtful Accounts | ||
Accounts Receivable-Cavey Co. | |||
Accounts Receivable-Fogle Co | |||
AAccounts Receivable-Lake Furniture | |||
Accounts Receivable-Melinda Shryer | |||
Dec. 31 | Bad Debt Expense | ||
Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCash |
Question Content Area
2. b. Post each entry that affects the following T accounts and determine the new balances:
Transaction | Debit amount | Transaction | Credit amount |
---|---|---|---|
Apr. 3 | $ | Jan. 1 Balance | $ |
July 16 | $ | Jan. 19 | $ |
Dec. 31 | $ | Nov. 23 | $ |
Dec. 31 unadjusted Bal | $ | ||
Dec. 31 Adjusted Entry | $ | ||
Dec. 31 Adjusted Balance | $ |
Transaction | Debit amount | Transaction | Credit amount |
---|---|---|---|
Dec. 31 Adjusting Entry OR Dec. 31 Unadjusted Balance | $ |
Question Content Area
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 $5,750,000 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 (after all of the adjustments and the adjusting entry). $
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