On December 31, 2017, when its accounts receivable were $270,000 and its account Allowance for Doubtful...

On December 31, 2017, when its accounts receivable were $270,000 and its account Allowance for Doubtful Accounts had an unadjusted debit balance of $1,800, Canarie Corp. estimated that $15,100 of its accounts receivable would become uncollectible, and it recorded the bad debts adjusting entry. On May 11, 2018, Canarie determined that Fei Ya Cheng’s account was uncollectible and wrote off $1,700. On November 12, 2018, Cheng paid the amount previously written off. Prepare the required journal entries to record each of the above transactions. What is the carrying amount of the receivables on (1) December 31, 2017; (2) May 11, 2018; and (3) November 12, 2018, assuming that the total amount of accounts receivable of $270,000 is unchanged on each of these three dates except for any changes recorded above

Expert Solution

Solution:

Part 1 – Journal Entries

Date	General Journal	Debit	Credit
Dec.31, 2017	Bad Debt Expense (1800+15,100)	$16,900
	Allowance for Doubtful Account		$16,900
	(to record year end adjustment entry and record bad debt expense)

May.11, 2018	Allowance for Doubtful Account	$1,700
	Accounts Receivable		$1,700
	(To record wrote off accounts receivable)

Nov.12, 2018	Accounts Receivable	$1,700
	Allowance for Doubtful Account		$1,700
	(to record re-instate previously written off accounts receivable)

Nov.12, 2018	Cash	$1,700
	Accounts Receivable		$1,700
	(To record cash on account)

Part 2(1) – Carrying amount of the receivables on Dec 31, 2017

	$$	$$
Accounts Receivable	$270,000
Less: Allowance for Doubtful Accounts	-$15,100
Carrying amount of Accounts Receivable (Accounts Receivable, net)	$254,900

Part 2(2) – Carrying amount of the receivables on May 11, 2018

	$$	$$
Accounts Receivable, gross	$270,000
Less: Allowance for Doubtful Accounts ($15,100 – 1700)	-$13,400
Carrying amount of Accounts Receivable (Accounts Receivable, net)	$256,600

Part 2(3) – Carrying amount of the receivables on Nov 12, 2018

	$$	$$
Accounts Receivable, gross (270,000 - 1700)	$268,300
Less: Allowance for Doubtful Accounts	-$15,100
Carrying amount of Accounts Receivable (Accounts Receivable, net)	$253,200

Note – It is given in the question that gross accounts receivable is not changed on the given dates. So I have taken gross amount.

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ekkarill92 answered 1 year ago

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