Question

1. Allowance method entries

   The following transactions were completed by 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. Journalize the receipt of $1,660 cash in full payment of Arlene’s account.
   Apr. 3.	Wrote off the $9,510 balance owed by Premier GS Co., which is bankrupt.
   July 16.	Received 45% of the $17,100 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 $2,705 cash in full payment.
   Dec. 31.	Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $7,155 ; Fogle Co., $2,125 ; Lake Furniture, $ 5,460 ; Melinda Shryer, $1,545.
   Dec. 31.	Based on an analysis of the $841,800 of accounts receivable, it was estimated that $36,600 will be uncollectible. Journalize the adjusting entry.

   Required:

   1. Record the January 1 credit balance of $34,900 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts.

   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 $841,800 balance in accounts receivable reflects the adjustments made during the year.

   Jan. 19-reinstate		fill in the blank a95a7e036050073_2
   			fill in the blank a95a7e036050073_4
   Jan. 19-collection		fill in the blank a95a7e036050073_6
   			fill in the blank a95a7e036050073_8
   Apr. 3		fill in the blank a95a7e036050073_10
   			fill in the blank a95a7e036050073_12
   July 16		fill in the blank a95a7e036050073_14	fill in the blank a95a7e036050073_15
   		fill in the blank a95a7e036050073_17	fill in the blank a95a7e036050073_18
   		fill in the blank a95a7e036050073_20	fill in the blank a95a7e036050073_21
   Nov. 23-reinstate		fill in the blank a95a7e036050073_23
   			fill in the blank a95a7e036050073_25
   Nov. 23-collection		fill in the blank a95a7e036050073_27
   			fill in the blank a95a7e036050073_29
   Dec. 31-write-off		fill in the blank a95a7e036050073_31	fill in the blank a95a7e036050073_32
   		fill in the blank a95a7e036050073_34	fill in the blank a95a7e036050073_35
   		fill in the blank a95a7e036050073_37	fill in the blank a95a7e036050073_38
   		fill in the blank a95a7e036050073_40	fill in the blank a95a7e036050073_41
   		fill in the blank a95a7e036050073_43	fill in the blank a95a7e036050073_44
   Dec. 31-adjusting		fill in the blank a95a7e036050073_46
   			fill in the blank a95a7e036050073_48

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

   Allowance for Doubtful Accounts
   	fill in the blank 6fdbc1fc3047fd7_2	Jan. 1 Balance	fill in the blank 6fdbc1fc3047fd7_3
   	fill in the blank 6fdbc1fc3047fd7_5		fill in the blank 6fdbc1fc3047fd7_7
   	fill in the blank 6fdbc1fc3047fd7_9		fill in the blank 6fdbc1fc3047fd7_11
   			fill in the blank 6fdbc1fc3047fd7_13
   			fill in the blank 6fdbc1fc3047fd7_15
   		Dec. 31 Adjusted Balance	fill in the blank 6fdbc1fc3047fd7_16

   Bad Debt Expense
   	fill in the blank 6fdbc1fc3047fd7_18

   3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
   $fill in the blank 9a0479f93fadfec_1

   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 $5,200,000 for the year, determine the following:

   a. Bad debt expense for the year.
   $fill in the blank 9a0479f93fadfec_2

   b. Balance in the allowance account after the adjustment of December 31.
   $fill in the blank 9a0479f93fadfec_3

   c. Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
   $fill in the blank 9a0479f93fadfec_4

Answer 1

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