Question

In: Accounting

At the beginning of the current period, Emler Corp. had balances in Accounts Receivable of $200,000...

At the beginning of the current period, Emler Corp. had balances in Accounts Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000 (credit). During the period, it had net credit sales of $650,000 and collections of $590,000. It wrote off as uncollectible accounts receivable of $5,000. However, a $3,000 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $20,000 at the end of the period.

Instructions

(a) Prepare the entries to record sales and collections during the period.

(b) Prepare the entry to record the write-off of uncollectible accounts during the period.

(c) Prepare the entries to record the recovery of the uncollectible account during the period.

(d) Prepare the entry to record bad debts expense for the period.

(e) Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts.

(f) Calculate the net realizable value of the receivables at the end of the period.

Expert Solution

(a) Dr Accounts Receivable $ 650,000

Cr Sales $ 650,000

Dr Cash $ 590,000

Cr Accounts Receivable $ 590,000

(b) Dr Allowance for Doubtful Accounts $ 5,000

Cr Accounts Receivable $ 5,000

(c) Dr Accounts Receivable $ 3,000

Cr Allowance for Doubtful Accounts $ 3,000

Dr Cash $ 3,000

Cr Accounts Receivable $ 3,000

(d) Dr Bad Debts Expense $ 13,000

Cr Allowance for Doutful Accounts $ 13,000

[$20,000 - $9,000 + $5,000 -$3,000]

(e) Ending balance in Accounts Receivable:

Beginning balance $ 200,000

+ credit sales $ 650,000

- collections $ 590,000

- write-offs $ 5,000

+ re-establish debtor $ 3,000

- collection $ 3,000

= Ending balance = $ 255,000

Ending balance in Allowance for Doubtful Accounts:

Beginning Balance $ 9,000

- write-offs $ 5,000

+ re-establish debtor $ 3,000

+ bad debts expense $ 13,000

= Ending balance = $ 20,000

(f) Accounts Receivable $ 255,000

- Allowance for Doubtful Accounts $ 20,000

= Net Realizable Value $ 235,000

ekkarill92 answered 1 year ago

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