Question
In: Accounting
Mosaic’s Company balance sheet at December 31, 2018, reported the following: Accounts receivable...........................................$2,500,000 Allowance for uncollectible...
Mosaic’s Company balance sheet at December 31, 2018, reported the following:
Accounts receivable...........................................$2,500,000
Allowance for uncollectible accounts...................$66,600
The following are the transactions to be taken into consideration for 2019:
a. Total credit sales for 2019 were $3,600,000.
b. 2% of sales were estimated to be uncollectible.
c. The company received cash payments on account during 2019 for $1,000,000
d. Accounts receivable identified to be uncollectible totaled $94,000.
e. December 31, 2019, aging of receivables indicates that $75,000 of the receivables is uncollectible.
Requirements:
1. What was the net realizable value of the receivables as at December 31, 2018?
2. Prepare the journal entries for the company’s 2019 transactions.
3. Prepare the Accounts receivable and the Allowance for uncollectible Accounts T-accounts based on the information presented above. (Note: The opening balances and the transactions from the journal entries must be recorded in their respective accounts)
4. What is the net realizable value of receivables as at December 31, 2019? (Show workings)
Solutions
Expert Solution
1)
| Current asset | ||
| Accounts receivable | 2500000 | |
| less: Allowance for un-collectible accounts | -66600 | |
| Accounts receivable ,net | 2,433,400 |
2)
| Date | Account title | Debit | credit |
| a | accounts receivable | 3600000 | |
| sales revenue | 3600000 | ||
| b | Bad debt expense | 72000 | |
| Allowance for un-collectible accounts (3600000*2%) | 72000 | ||
| c | cash | 1000000 | |
| Accounts receivable | 1000000 | ||
| d | Allowance for un-collectible accounts | 94000 | |
| Accounts receivable | 94000 | ||
| e | Bad debt expense | 30400 | |
| Allowance for un-collectible accounts | 30400 |
#unadjusted balance in allowance account =Beginning+Bad debt expense -write off
= 66600 +72000 - 94000
= 44600
Bad debt expense estimated at year end = Balance in allowance account at year end - unadjusted balance in allowance account
= 75000 - 44600
= 30400
3)
| ACCOUNTS RECEIVABLE | |||
| Beg bal | 2500000 | c | 1000000 |
| a | 3600000 | d | 94000 |
| Bal | 906000 | ||
| ALLOWANCE FOR UNCOLLECTIBLE ACCOUNT | |||
| d | 94000 | Beg Bal | 66600 |
| b | 72000 | ||
| e | 30400 | ||
| Bal | 75000 | ||
4)
| Current asset | ||
| Accounts receivable | 906000 | |
| less: Allowance for un-collectible accounts | -75000 | |
| Accounts receivable ,net | 831000 |
ekkarill92 answered 1 year agoRelated Solutions
Mosaic’s Company balance sheet at December 31, 2018, reported the following: Accounts receivable...........................................$2,500,000 Allowance for uncollectible...
Mosaic’s Company balance sheet at December 31, 2018, reported
the following:
Accounts
receivable...........................................$2,500,000
Allowance for uncollectible
accounts...................$66,600
The following are the transactions to be taken into
consideration for 2019:
a. Total credit sales for 2019 were $3,600,000.
b. 2% of sales were estimated to be uncollectible.
c. The company received cash payments on account during 2019 for
$1,000,000
d. Accounts receivable identified to be uncollectible totaled
$94,000.
e. December 31, 2019, aging of receivables indicates that
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less: Allowance for
uncollectible accounts
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1.
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By the end of the year, the company had collected $6,291,700 of
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following transactions related to receivables.
1.
Sales on
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2.
Sales returns and
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3.
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4.
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uncollectible 92,000
5.
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Number of Days Outstanding
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0–30
31–60
61–90
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Accounts receivable
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$330,000
$120,000
$80,000
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2%
6%
10%
30%
Estimated uncollectible accounts
$
$
$
$
$...
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