Direct Write-Off Method ournalize the following transactions using the direct write-off method of accounting for uncollectible receivables.
Jan. 17: Received $3,220 from Paula Spitler and wrote off the remainder owed of $6,630 as uncollectible. If an amount box does not require an entry, leave it blank.
Mar. 17 Allowance for Doubtful Accounts Accounts Receivable-Paula Spitler
Apr. 6: Reinstated the account of Paula Spitler and received $5,820 cash in full payment. Reinstate Collection Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $3,460,000; Allowance for Doubtful Accounts has a debit balance of $12,500; and sales for the year total $46,300,000. Bad Debt Expense is estimated at ½ of 1% of sales
a. Determine the amount of the adjusting entry for uncollectible accounts.
b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
c. Determine the net realizable value of accounts receivable. 3,460,000.

Question

21-07-2020
Business

contestada

Direct Write-Off Method ournalize the following transactions using the direct write-off method of accounting for uncollectible receivables.
Jan. 17: Received $3,220 from Paula Spitler and wrote off the remainder owed of $6,630 as uncollectible. If an amount box does not require an entry, leave it blank.
Mar. 17 Allowance for Doubtful Accounts Accounts Receivable-Paula Spitler
Apr. 6: Reinstated the account of Paula Spitler and received $5,820 cash in full payment. Reinstate Collection Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $3,460,000; Allowance for Doubtful Accounts has a debit balance of $12,500; and sales for the year total $46,300,000. Bad Debt Expense is estimated at ½ of 1% of sales
a. Determine the amount of the adjusting entry for uncollectible accounts.
b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
c. Determine the net realizable value of accounts receivable. 3,460,000.

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akiran007 akiran007 · Answer 1 · 2020-07-26T05:32:35+02:00

Answer:

In percent of Sales method the balance for allowance for doubtful accounts on the balance sheet and the income statement is never the same as the old and new bad debts may have different balances.

Explanation:

Journal Postings

Date Particulars Debit Credit

Jan 17 Cash $3220

Bad Debts $ 6630

Accounts Receivable-Paula Spitler $ 9850

Mar 17 Accounts Receivable-Paula Spitler $5,820 Dr

Allowance for Doubtful Accounts $5,820 Cr

Re instating the account of Paula Spitler

Apr 6 Cash $ 5820 Dr

Accounts Receivable-Paula Spitler $5,820 Cr

Payment received in full.

Percent of Sales Method

Accounts Receivable $3,460,000;

Allowance for Doubtful Accounts $12,500 debit;

Sales $46,300,000.

Bad Debt Expense is estimated at ½ of 1% of sales

a. Adjusting entry for uncollectible accounts.

Bad debts = 1/2 of 1 % of $ 46,300,000;= $ 231500

Bad Debts Expense $ 231 500 Dr

Allowance for Doubtful Accounts 231,500 Cr

b. Accounts Receivable $3,460,000;

Less Allowance for Doubtful Accounts 231,500 Cr

Accounts Receivable Balance = $ 3228500

Bad Debts Balance $ 231 500

Allowance for Doubtful Accounts $231,500

c. Accounts Receivable $3,460,000;

Less Allowance for Doubtful Accounts 231,500 Cr

Net Realizable value of Accounts Receivable $ 3228500