Question

The accounts receivable balance for Renue Spa at December 31, Year 1, was $81,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,200. During Year 2, $2,500 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $150 of receivables that had been written off in a previous accounting period. Services provided on account during Year 2 were $219,000, and cash collections from receivables were $221,009. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.

Required:
a. Record the transactions in general journal form and post to T-accounts.
b. Based on the preceding information, compute (after year-end adjustment):

1. (1) Balance of allowance for doubtful accounts at December 31, Year 2.
2. (2) Balance of accounts receivable at December 31, Year 2.
3. (3) Net realizable value of accounts receivable at December 31, Year 2.
   

c. What amount of uncollectible accounts expense will Renue report for Year 2?

Record the transactions in post to T-accounts.

	Cash Service Revenue Beg. Bal. Beg. Bal. End. Bal. End. Bal. Accounts Receivable Uncollectible Accounts Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0 Allowance for Doubtful Accounts Beg. Bal. End. Bal.

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	(1) Allowance for doubtful accounts (2) Accounts receivable (3) Net realizable value

	Uncollectible accounts expense

Answer 1

no	TR	General Journal				Debit	Credit
A	1)	Allowance for doubtful accounts				2,500
		Account receivable					2,500
B	2a.	Account receivable				150
		Allowance for Doubtful accounts					150
	2b.	cash				150
		account receivable					150
C	3)	Accounts receivable				219,000
		service revenue					219,000
D	4)	cash				221,009
		Accounts receivable					221,009
E	5)	Uncollectible accounts expense				2190
		Allowance for doubtful accounts					2,190
		(219000*1%)
T- Accounts
Cash					Service revenue
Beg bal	0				beg bal		0
2b)	150						219,000	3)
4)	221,009
end bal	221159				end bal		219000
Accounts receivable					uncollectible accounts expense
Beg bal	81,000				beg bal	0
2a.	150	2,500	1)		5)	2190
3)	219,000	150	2b)
		221,009	4)
end bal	76,491				end bal	2190
Allowance for doubtful accounts
Beg bal		2,200
1)	2,500	150	2a
		2190	5)
end bal		2,040
b)
1)	Balance of allowance for doubtful accounts					2,040
2)	Accounts receivable					76,491
3)	Net realizable value					74,451
c)	Uncollectoble accounts expense					2190