Reference no: EM13971057
The following transactions were complete by Clark Management during the current fiscal year ended December 31:
July 5. Received 70% of the $21,000 owed by dockins Co. a bankrupt business and wrote off the remainder as uncollectible
Sept 21. Reinstated the account of Bart Tiffany, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,875 cash in full payment of Tiffany's account.
Oct 19. Wrote off the $6,275 balance owed by Ski Time Co. which has no assets.
Nov. 6 Reinstated the account of Kirby Co. which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,750 cash in full payment of the account.
Dec 31 Wrote off the following accounts as uncollectible (compound entry): Maxie Co. $2,150, Kommers Co. $3,600, Helena Distributors $5,500, Ed Ballantyne $1,750.
Dec. 31 Based on an analysis of the $815,240 of accounts receivable, it was estimated that $16,750 will be uncollectible. Journalized the adjusting entry.
Instructions:
1. Record the January 1 credit balance of $12,550 in a T-account for Allowance for Doubtful Accounts.
2. Journalize the transactions. Post each entry that affects the following selected T-accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense.
3. Determine the expected net realizable value of the accounts receivable as of December 31.
4. 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 1/4 of 1% of the net sales of $7,126,000 for the year, determine the following:
a. Bad debt expense for the year.
b. Balance in the allowance account after the adjustment of December 31.
c. Expected net realizable value of the accounts receivable as of December 31.
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