Question

In: Accounting

Kim and Kim (K&K) Company’s balance sheet at December 31, 2017, reported the following Accounts receivable..................................................................

Kim and Kim (K&K) Company’s balance sheet at December 31, 2017, reported the following

Accounts receivable............................................................... $2,000,000

Allowance for uncollectible accounts.....................................$20,000 DR

Requirements:

1. What was the net realizable value of these receivables at December 31, 2017?

2. Journalize, without explanations, 2018 entries for Kim and Kim Company:

a. Total credit sales for 2018 were $1,200,000; 2% of sales were estimated to be uncollectible.

b. K&K Company received cash payments on account during 2018 of $780,000.

c. Accounts receivable identified to be uncollectible totaled $38,000.

d. December 31, 2018, the aging of receivables indicates that $43,000 of the receivables is uncollectible (target balance).

3. Post the transactions to the Accounts receivable and the Allowance for uncollectible accounts T-accounts. Calculate and report K&K’s receivables and related allowance on the December 31, 2018 balance sheet.

4. What is the net realizable value of receivables at December 31, 2018?

5. How much is the uncollectible account expense for 2018?

Solutions

Expert Solution

1. Net realizable value of these receivables at December 31, 2017

A. Accounts receivable............................................................... $2,000,000

B.Allowance for uncollectible accounts............................................$20,000 DR

C.Net Realizable(A-B).................................................................$1,980,000

2. Journal Entries

a. Total credit sales for 2018 were $1,200,000; 2% of sales were estimated to be uncollectible.

(i) Account Receivable Dr. $1,176,000

Provision for Bad Debts Dr.  $24,000

   To Credit Sales Cr. $1,200,000

(ii) Profit & Loss A/c Dr. $24,000

   To Provision for Bad Debts Cr.  $24,000

b. K&K Company received cash payments on account during 2018 of $780,000.

Cash Dr. $780,000

To Account Receivable Cr. $780,000

c. Accounts receivable identified to be uncollectible totaled $38,000.

  Bad Debts Dr. $38,000

To Account Receivable Cr. $38,000

(ii) Profit & Loss A/c Dr. $38,000

   To Bad Debts Cr.  $38,000

d. December 31, 2018, the aging of receivables indicates that $43,000 of the receivables is uncollectible (target balance).

Provision for Bad Debts Dr.  $43,000

   To Accounts Receivable Cr. $43,000

(ii) Profit & Loss A/c Dr. $43,000

   To Provision for Bad Debts Cr.  $43,000

ekkarill92 answered 2 years ago
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