Question

Super Duper Company’s balance sheet at December 31, 2016, reported the following: Accounts receivable............................................................... $420,000 Less: Allowance for uncollectible accounts............................$8,400 Requirements: 1. What was the net realizable value of these receivables at December 31, 2016? 2. Journalize, without explanations, 2017 entries for Super Duper: a. Total credit sales for 2017 were $840,000; 4% of sales were estimated to be uncollectible. Super Duper received cash payments on account during 2017 of $520,000. b. Accounts receivable identified to be uncollectible totaled $26,000. c. December 31, 2017, aging of receivables indicates that $20,000 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 Super Duper’s receivables and related allowance on the December 31, 2017 balance sheet. 4. What is the net realizable value of receivables at December 31, 2017? 5. How much is the uncollectible account expense for 2017?

Answer 1

1	The net realizable value of these receivables at December 31, 2016 = $420,000 - $8,400 = $411,600
2
Date	Accounts Titles and Explanation	Debit	Credit
a	Accounts Receivable	$840,000
	Sales Revenue		$840,000
	Allowance for Bad debts	$33,600
	Accounts Receivable		$33,600
b	Cash	$520,000
	Accounts Receivable		$520,000
	Accounts Receivable
	Particulars	Amount		Particulars	Amount
	Beginning Balance	$420,000
	Credit sales	$840,000		Cash collections	$520,000
				Write offs	$26,000
				Ending balance	$714,000
	Allowance for doubtful accounts
	Particulars	Amount		Particulars	Amount
				Beginning Balance	$8,400
	Write offs	$26,000		Bad debts	$33,600
	Ending balance	$16,000
3
	Bad debts expense =Target balance +Unadj. debit balance =$20,000 + $17,600 =$37,600
	Allowance for doubtful accounts
	Particulars	Amount		Particulars	Amount
				Beginning Balance	$8,400
	Write offs	$26,000
	updated Ending balance	$17,600
	Allowance for doubtful accounts
	Particulars	Amount		Particulars	Amount
				Beginning Balance	$8,400
	Write offs	$26,000		Bad debts	$37,600
	Ending balance	$20,000