Reference no: EM132489564

Entries Related to Uncollectible Accounts

The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31:

1. Jan. 19.Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $2,650 cash in full payment of Arlene's account.
2. Apr. 3.Wrote off the $15,180 balance owed by Premier GS Co., which is bankrupt.
3. July 16.Received 25% of the $27,200 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible
4. .Nov. 23.Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $4,320 cash in full payment.
5. Dec. 31.Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$11,420; Fogle Co., $3,390; Lake Furniture, $8,720; Melinda Shryer, $2,465.
6. Dec. 31.Based on an analysis of the $1,345,500 of accounts receivable, it was estimated that $58,500 will be uncollectible. Journalized the adjusting entry.

Required:

Question 1. Record the January 1 credit balance of $55,700 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts.

Question 2. a. Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $1,345,500 balance in accounts receivable reflects the adjustments made during the year.

1. Jan. 19-reinstateAccounts Receivable-Arlene Gurley
2. Allowance for Doubtful Accounts
3. Jan. 19-collectionCash
4. Accounts Receivable-Arlene Gurley
5. Apr. 3Allowance for Doubtful Accounts
6. Accounts Receivable-Premier GS Co.
7. July 16Cash
8. Allowance for Doubtful Accounts
9. Accounts Receivable-Hayden Co.
10. Nov. 23-reinstateAccounts Receivable-Harry Carr
11. Allowance for Doubtful Accounts
12. Nov. 23-collectionCash
13. Accounts Receivable-Harry Carr
14. Dec. 31-write-offAllowance for Doubtful Accounts
15. Accounts Receivable-Cavey Co.
16. Accounts Receivable-Fogle Co.
17. Accounts Receivable-Lake Furniture
18. Accounts Receivable-Melinda Shryer
19. Dec. 31-adjustingBad Debt Expense
20. Allowance for Doubtful Accounts

Question 2. b. Post each entry that affects the following T accounts and determine the new balances:

1. Allowance for Doubtful Accounts
2. Jan. 1 Balance
3. Dec. 31 Adjusted Balance

Question 3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).

Question 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 ½ of 1% of the sales of $8,310,000 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).