Question

In: Accounting

Kim and Kim Company’s balance sheet at December 31, 2017, reported the following: Accounts receivable............................................................... $2,000,000...

Kim and Kim 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 Super Duper:

a. Total credit sales for 2018 were $1,200,000; 2% of sales were estimated to be uncollectible. Super-Duper received cash payments on account during 2018 of $780,000.

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

c. December 31, 2018, 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 Super Duper’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)

Accounts receivable 2,000,000
Less: Allowance for uncollectible accounts - (-20000 )   [since Debit Balance ]
Net realizable value 2,020,000

**Allowance account has a normal credit balance so when it has debit balance at end it is denoted with - sign

2)

Date Account title Debit credit
a Accounts receivable 1200000
Sales revenue 1200000
a-2 cash 780000
Accounts receivable 780000
b Allowance for uncollectible accounts 38000
Accounts receivable 38000
c Bad debt expense 101000
Allowance for uncollectible accounts 101000

** Allowance for uncollectible accounts at end =Beginning balance+Bad debt expense- write offs

        43000 = -20000+BD - 38000

        43000 =BD - 58000

     Bad debt expense = 43000 +58000

              = 101000

3)

ACCOUNTS RECEIVABLE
Beginning balance 2000000 a-2)collections 780000
a-1)sales 1200000 b)write off 38000
Balance at end 2382000
Allowance for uncollectible accounts
Beginning Balance 20000 Bad debt expense 101000
Write off 38000
Balance at end 43000

4)

Accounts receivable 2382000
Less: Allowance for uncollectible accounts -43000
Net realizable value 2339000

5) uncollectible account expense for 2018 = 101000


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