Question

The accounts receivable balance for Renue Spa at December 31, 2015, was $85,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,300. During 2016, $2,700 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $180 of receivables that had been written off in a previous accounting period. Services provided on account during 2016 were $220,000, and cash collections from receivables were $222,018. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.

a. Record the transactions in general journal form and post to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Based on the preceding information, compute (after year-end adjustment):

(1) Balance of allowance for doubtful accounts at December 31, 2016.

(2) Balance of accounts receivable at December 31, 2016.

(3) Net realizable value of accounts receivable at December 31, 2016.

Answer 1

Req a:
Journal Entries
Date	Accounts title and explanations				Debit $	Credit $
a.	Allowance for uncollectible Accounts Dr.				2,700
	Accounts receivable					2700
b.	Accounts receivable Dr.				180
	Allowance for uncollectible accounts					180
	Cash Account Dr.				180
	Accounts receivable					180
c.	Accounts receivable Dr.				220,000
	Service revenue Account					220,000
d.	Cash Account Dr.				222,018
	Accounts receivable					222,018
e.	Bad debts expense Account (220,000*1%)				2200
	Allowance for uncollectible accounts					2,200
Req b:
Balance in accounts:
Allowance for Uncollectible accounts:
Beginning balance in Allowance:				2300
Add: Amount reinstated				180
Add: bad debts expense				2200
Less: Amount written off				2700
Ending balance in Allowance account				1980
Accounts receivable:
Beginning balance in Accounts receivable				85,000
Add: Service revenue				220000
Less: Cash collected				-222018
Less: Amount written off				-2700
Ending balance in Accounts receivable(Gross)				80282
Net realizable value of AR:
Accounts receivable(Gross)				80282
Less: Allowance for uncollectible accounts				1980
Accounts receivable (Net)				78302