I need help with the t accounts and #3 and #4, would be nice to double check my
ID: 2486437 • Letter: I
Question
I need help with the t accounts and #3 and #4, would be nice to double check my journal.
The following transactions were completed by The Irvine Company during the current fiscal year ended December 31:
Feb. 8 Received 30% of the $18,900 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible. May 27 Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,265 cash in full payment of Seth’s account. Aug. 13 Wrote off the $6,410 balance owed by Kat Tracks Co., which has no assets. Oct. 31 Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,980 cash in full payment of the account. Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,090; Bonneville Co., $5,485; Crow Distributors, $9,415; Fiber Optics, $1,190. Dec. 31 Based on an analysis of the $1,774,000 of accounts receivable, it was estimated that $35,480 will be uncollectible. Journalized the adjusting entry.Explanation / Answer
Feb 8. Received 30% of the $18900 balance owed by DeCoy Co, a bankrupt business, and wrote off the remainder as uncollectable.
Dr Cash 5,670
Dr Allowance for Doubtful Accounts $13,230
Cr Accounts Receivable $18,900
May27. Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectable. Journalized the receipt of $7,265 cash in full payment of Seth’s account.
Dr Accounts Receivable $7,265
Cr Allowance for Doubtful Accounts $7,265
Dr Cash $7,265
Cr Accounts Receivable $7,265
Aug.13. Wrote off the $6,410 balance owed by Covered Kat Tracks Co, which has no assets.
Dr Allowance for Doubtful Accounts $6,410
Cr Accounts Receivable $6,410
Oct. 31. Reinstated the account of Crawford Co, which had been written off in the preceding year as uncollectable. Journalized the receipt of $3,980 cash on full payment of the account.
Dr Accounts Receivable $3,980
Cr Allowance for Doubtful Accounts $3,980
Dr Cash $3,980
Cr Accounts Receivable $3,980
Dec 31. Wrote off the following accounts as uncollectable (compound entry):
Dr Allowance for Doubtful Accounts $23180
Cr Accounts Receivable, Newbauer Co., $7,090
Cr Accounts Receivable, Bonneville Co., $5,485
Cr Accounts Receivable, Crow Distributors, $9,415
Cr Accounts Receivable, Fiber Optics, $1,190
31. Based on an analysis of the $1,774,000 of accounts receivable, it wa estimated that $35,480 will be uncollectable. Journalized the adjusting entry.
$25,795-$13,230+$7,265-$6,410+$3,980-$23180= 5780
debit balance in the Allowance account $35,480+$5780=$41260 adjusting entry
Dr Bad Debt Expense $41260
The Allowance account now has balance of $35,480
$1,774,000 - $41260 = 1732740net realizable value of accounts receivable.
Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ¼ of 1% of the net sales of $18,660,000 for the year, determine the following:
A. Bad debt expense for the year.
=$18660000*1%*1/4=$46650+$5780=$52430
B. Balance in the allowance account after the adjustment of December 31.
=$52430
C. Expected net realizable value of the accounts receivable as of December 31.
=$18660000-$52430=$18607570