Question

1. Entries Related to Uncollectible Accounts

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

   Jan. 19.	Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,620 cash in full payment of Arlene’s account.
   Apr. 3.	Wrote off the $9,280 balance owed by Premier GS Co., which is bankrupt.
   July 16.	Received 25% of the $16,700 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible.
   Nov. 23.	Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,640 cash in full payment.
   Dec. 31.	Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$6,980; Fogle Co., $2,075; Lake Furniture, $5,330; Melinda Shryer, $1,505.
   Dec. 31.	Based on an analysis of the $821,100 of accounts receivable, it was estimated that $35,700 will be uncollectible. Journalized the adjusting entry.

   Required:

   1. Record the January 1 credit balance of $34,000 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts.

   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 $821,100 balance in accounts receivable reflects the adjustments made during the year.

   Jan. 19-reinstate
   Jan. 19-collection
   Apr. 3
   July 16
   Nov. 23-reinstate
   Nov. 23-collection
   Dec. 31-write-off
   Dec. 31-adjusting

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

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

   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 ½ of 1% of the sales of $5,070,000 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).
   $

Check My Work3 more Check My Work uses remaining.

Answer 1

Date	General Journal	Debit	Credit
Jan-19	Accounts receivable - Arlene Gurley	$ 1,620
	Allowance for Doubtful Accounts		$ 1,620
	(To reinstate Accounts receivable )
Jan-19	Cash	$ 1,620
	Accounts receivable - Arlene Gurley		$ 1,620
	(To record collection on Account )
Apr-03	Allowance for Doubtful Accounts	$ 9,280
	Accounts receivable - Premier GS Co.		$ 9,280
	(To record Account write off )
Jul-16	Cash ($16,700*25%)	$ 4,175
	Allowance for Doubtful Accounts (16700 -4175)	$ 12,525
	Accounts receivable - Hayden Co.		$ 16,700
	(To record Collection from customer and Remainder amount is write off )
Nov-23	Accounts receivable - Harry Car	$ 2,640
	Allowance for Doubtful Accounts		$ 2,640
	(To reinstate Accounts receivable )
Nov-23	Cash	$ 2,640
	Accounts receivable - Harry Car		$ 2,640
	(To record collection on Account )
Dec-31	Allowance for Doubtful Accounts (6980+2075+5330+1505)	$ 15,890
	Accounts receivable - Cavey Co.		$ 6,980
	Accounts receivable - Fogle Co.		$ 2,075
	Accounts receivable - Lake Furniture		$ 5,330
	Accounts receivable - Melinda Shryer		$ 1,505
	(To record Account write off )
Dec-31	Bad debt expense (See Note 1 Below )	$ 35,135
	Allowance for Doubtful Accounts		$ 35,135
	(To record Bad debts Expense )

Note 1 :
To Calculate the Bad Debts Expense :
Particulars	Amount($)
Allowance for Doubtful Accounts	$ 34,000
Add: Reinstate Accounts receivable in Jan 19	$ 1,620
Less: Accounts Write off in April 3	($ 9,280 )
Less: Accounts Write off in July 16	($ 12,525 )
Add: Reinstate Accounts receivable in Nov 23	$ 2,640
Less: Accounts Write off in Dec 31	($ 15,890)
Unadjusted Credit Balance of Allowance for Doubtful Accounts	$ 565
Particulars	Amount($)
Adjusted Credit Balance of Allowance for Doubtful Accounts	$ 35,700
Less: Unadjusted Credit Balance of Allowance for Doubtful Accounts	($565)
Bad debts expense	$ 35,135

Allowance for Doubtful Accounts
Apr-03	$ 9,280	Jan 1 Balance	$ 34,000
Jul-16	$ 12,525	Jan-19	$ 1,620
Dec-31	$ 15,890	Nov-23	$ 2,640
		Dec 31 Unadjusted Balance	$ 565
		Dec 31 Adjusting entry	$ 35,135
		Dec 31 Adjusted Balance	$ 35,700

Bad debt Expense
Dec 31 Adjusting entry	$ 35,135

Required 3 :
Particulars	Amount($)
Accounts Receivable	$ 821,100
Less: Adjusted Credit Balance of Allowance for Doubtful Accounts	($ 35,135)
Net Realizable Value of Accounts receivable	$ 785,965

Required 4 :
a) To Calculate the Bad debts Expenses :
a) Bad debts Expenses = ($5,070,000 *1 %*1/2 ) = $ 25,350
b) To Calculate the Balance in Allowance account after adjustment of December 31
Particulars	Amount($)
Unadjusted Credit Balance of Allowance for Doubtful Accounts	$ 565
Add: Adjustment entry Bad debts expense (See Required 4(a))	$ 25,350
Balance in Allowance account after adjustment of December 31	$ 25,915
c) To Calculate the Net receivable value of Accounts receivable as December 31 :
Particulars	Amount($)
Accounts receivable	$ 821,100
Less: Adjusted Credit Balance of Allowance for Doubtful Accounts	($ 25,915 )
Net receivable value of Accounts receivable	$ 795,185