Question

Potter Company began operating in 2007. During 2007, it provided $308,000 in services to customers on account and collected 260,000 in cash from its accounts receivable. At the end of the year, it adjusted its accounts based on the estimate that 1% of the revenue on account would not be collected.

Prepare the journal entries to record all transactions related to accounts receivable.

Account titles: Debit: Credit:

What was the net realizable value of Potter's accounts receivable at the end of 2007?

Is this correct?

account titles debit credit

A/R 308,000

service revenue 308,000

cash 260,000

A/R 260,000

allowance for doubtful acc. 3,080

A/R 3,080

Net realizable value:

308,000 x 0.01= 3,080

308,000-3,080-260,000=44,920

Answer 1

• Last Journal Entry by you is WRONG.
• Complete correct answer is below:

Transaction #	Accounts title	Debit	Credit
#1	Accounts receivables	$              308,000
	Service Revenue		$              308,000
	(Revenue earned on account)
#2	Cash	$              260,000
	Accounts receivables		$              260,000
	(Cash collected)
#3	Bad Debt Expense [Uncollectible expense]	$                   3,080 [308000 x 1%]
	Allowance for Doubtful Accounts		$                   3,080
	(Bad Debt Expense recorded)

Gross Accounts receivables [308000 - 260000]	$                48,000
Less: Allowance for Doubtful account balance	$                   3,080
Net realizable Value	$                44,920