Reference no: EM132717684

Accounting for Assets: Receivables

Johnson company's financial year ended on December 31, 2010. All the transactions related to the company's uncollectible accounts are can be found below:

January 15

Wrote of $440 account of Miller Company as uncollectible

April 2nd

Re-establish the account of Louisa Teller and record the collection of $1,050 as payment in full for her account which had been written off earlier

July 31

Received 40% of the $700 balance owed by William John and wrote off the remainder as uncollectible

August 15

Wrote off as uncollectible the accounts of Sherwin Company, $1,700 and V. Vasell $2,200

September 26

Received 25% of the $1,140 owed by Grant Company and wrote off the remainder as uncollectible

October 16

Received $741 from M. Fuller in full payment of his account which had been written off earlier as uncollectible

December 31

Estimated uncollectible accounts expense for the year to be 1.5% of net credit sales of $521,000

The accounts receivable account had a balance of $114,630 and the beginning balance in the allowance for uncollectible accounts was $6,200.

Required:

Problem 1. Prepare journal entries for each transaction.

Problem 2. Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based on the information presented and balance off each account.

Problem 3. Prepare the balance sheet extract as at Dec 31 to show the net realizable value for the Accounts Receivable.

Problem 4. Assume that the aging of accounts receivable method was used by the company and that $7,050 of the accounts receivable as of December 31 were estimated to be uncollectible. You are now required to:

a. Determine the amount to be charged to uncollectible expense (show your workings for the computation of this figure).

b. Prepare the balance sheet extract to show the net realizable value of the Accounts Receivable as at December 31