Question

Vulcan Service Co. experienced the following transactions for Year 1, its first year of operations:

Provided $84,000 of services on account.

Collected $50,400 cash from accounts receivable.

Paid $30,000 of salaries expense for the year.

Adjusted the accounts using the following information from an accounts receivable aging schedule:

Number of Days Past Due	Amount			Percent Likely to Be Uncollectible	Allowance Balance
Current	$	24,864		.01
0-30		1,680		.05
31-60		2,352		.10
61-90		2,016		.30
Over 90 days		2,688		.50

Required
a. Record the above transactions in general journal form and post to T-accounts.
b. Prepare the income statement for Vulcan Service Co. for Year 1.
c. What is the net realizable value of the accounts receivable at December 31, Year 1?

Answer 1

No	Accounts Title	Dr	Cr
1	Accounts Receivable	$84,000
	Service Revenue		$84,000
2	Cash	$50,400
	Accounts Receivable		$50,400
3	Salaries expenses	$30,000
	Cash		$30,000
4	Uncollectibel Accounts expenses	$2,517
	Allowance for Doubtful debts		$2,517
	Age	Amount	Estimated % uncollected	Estimated uncollectible Amt
	current	24864	0.01	249
	0-30 days	1680	0.05	84
	31-60	2352	0.1	235
	61-90	2016	0.3	605
	Over 90 days	2688	0.5	1344
	Total Accounts receivable	33600		2517
	Cash
	Dr				Cr
	Accounts Receivable	$50,400	Salaries expenses		$30,000
	ending balance	$20,400
	Accounts Receivable
	Dr				Cr
	Sales	$84,000	Cash		$50,400
	ending balance	$33,600
	Uncollectible Accounts expenses
	Dr				Cr
	Allowance for Doubtful debts	$2,517
	Salaries expenses
	Dr				Cr
	Cash	30000
	Service Revenue
	Dr				Cr
			Accounts Reeivable		$84,000
	Allowance for Doubtful debts
		Uncollectibel Accounts expenses			$2,517
ans b	Income Statement
	Service Revenue		$84,000
	Less: Opearting Expenses
	salaries expenses	30000
	Uncollectible Accounts expenses	$2,517
	Total operating expenses		$32,517
	Net Operating Income		$51,483
Ans c
	Accounts Receivable	$33,600
	Less: Allowance for Doubtful debts	2517
	Net Realizable value	$31,083