Received $600 from Rachel Elpel and wrote off the remainder owed of $1,350 as uncollectible.

Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables:

Oct. 2. Received $600 from Rachel Elpel and wrote off the remainder owed of $1,350 as uncollectible.
Dec. 20. Reinstated the account of Rachel Elpel and received $1,350 cash in full payment.


Answer:











Oct. 2 Cash 600
Bad Debt Expense 1,350
Accounts Receivable—Rachel Elpel 1,950
Dec. 20 Accounts Receivable—Rachel Elpel 1,350
Bad Debt Expense 1,350
20 Cash 1,350
Accounts Receivable—Rachel Elpel 1,350




Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:

Feb. 12. Received $800 from Leo Jorgenson and wrote off the remainder owed of $2,400 as uncollectible.
May 3. Reinstated the account of Leo Jorgenson and received $2,400 cash in full payment.


Answer:











Feb. 12 Cash 800
Allowance for Doubtful Accounts 2,400
Accounts Receivable—Leo Jorgenson 3,200
May 3 Accounts Receivable—Leo Jorgenson 2,400
Allowance for Doubtful Accounts 2,400
3 Cash 2,400
Accounts Receivable—Leo Jorgenson 2,400

Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:

Journalize the following transactions, using the allowance method of accounting for uncollectible receivables:

Oct. 2. Received $600 from Rachel Elpel and wrote off the remainder owed of $1,350 as uncollectible.
Dec. 20. Reinstated the account of Rachel Elpel and received $1,350 cash in full payment.


Answer:











Oct. 2 Cash 600
Allowance for Doubtful Accounts 1,350
Accounts Receivable—Rachel Elpel 1,950
Dec. 20 Accounts Receivable—Rachel Elpel 1,350
Allowance for Doubtful Accounts 1,350
20 Cash 1,350
Accounts Receivable—Rachel Elpel 1,350



At the end of the current year, Accounts Receivable has a balance of $685,000; Allowance for Doubtful Accounts has a credit balance of $9,000; and net sales for the year total $7,400,000. Bad debt expense is estimated at ¾ of 1% of net sales.

Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.


Answer:










a. $55,500 ($7,400,000 × 0.0075)
b. Adjusted Balance
Accounts Receivable…………………………………………………… $685,000
Allowance for Doubtful Accounts ($9,000 + $55,500)…………… 64,500
Bad Debt Expense……………………………………………………… 55,500
c. Net realizable value ($685,000 – $64,500)………………………… $620,500