The following information is available for Quality Book Sales’ sales on account and accounts receivable: Accounts...

The following information is available for Quality Book Sales’ sales on account and accounts receivable: Accounts receivable balance, January 1, 2016 $ 79,500 Allowance for doubtful accounts, January 1, 2016 4,910 Sales on account, 2016 560,000 Collection on accounts receivable, 2016 566,000 After several collection attempts, Quality Book Sales wrote off $2,960 of accounts that could not be collected. Quality Book Sales estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Required: a. Compute the following amounts: (1) Using the allowance method, the amount of uncollectible accounts expense for 2016. (2) Net realizable value of receivables at the end of 2016. b. Record the general journal entries to: (1) Record sales on account for 2016. (2) Record cash collections from accounts receivable for 2016. (3) Write off the accounts that are not collectible. (4) Record the estimated uncollectible accounts expense for 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Expert Solution

Balance in Accounts receivable:
Beginning Accounts receivable	79500
Add: Sales	560000
Less: Collections	566000
Less: Amount written off	2960
Ending Accounts receivable	70540
Esimated Bad debts @5%
Required ending Balance in Allowance	3527

Balance in Allowance account:
Beginning Balance in Allowance	4910
Less: Written off amount	-2960
Existing balance in Allowance	1950
Required balance in Allowance	3527
Bad debts expense	1577

Uncollectible expense amount	1577

Net realizable value of Accounts receivable:
Accounts receivable(Gross)	70540
Less: Allowance for Uncollectible account	3527
Accounts receivable(Net)	67013


Req b:
Journal entries:
Accounts title and explanations		Debit $	Credit $
Accounts receivable Dr.		560,000
Sales revenue			560,000

Cash Account Dr.		566000
Accounts receiavble			566000

Allowance fro uncollectible Accounts Dr.		2960
Accounts receivable			2960

Bad debts expense Account Dr.		1577
Allowance for uncollectible accounts			1577

ekkarill92 answered 1 year ago

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