### PR 8-1A Entries Related to Uncollectible Accounts#### Subject: Accounting#### Topic: Handling Uncollectible AccountsThe following transactions were completed by The Irvine Company during the current fiscal year ended December 31:**Transaction Details:**- **Feb. 8**: Received 40% of the $18,000 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 $7,350 cash in full payment of Seth’s account.- **Aug. 13**: Wrote off the $6,400 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 $3,880 cash in full payment of the account.- **Dec. 31**: Wrote off the following accounts as uncollectible (compound entry): - Newbauer Co: $7,190 - Bonneville Co: $5,500 - Crow Distributors: $9,400 - Fiber Optics: $1,110- **Dec. 31**: Based on an analysis of the $1,785,000 of accounts receivable, it was estimated that $35,700 will be uncollectible. Journalized the adjusting entry.---### Instructions1. **Record the January 1 Credit Balance:** Record the January 1 credit balance of $26,000 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 - Bad Debt Expense3. **Determine the Expected Net Realizable Value:** - Calculate the expected net realizable value of the accounts receivable as of December 31.4. **Adjusting Entry Based on Sales Analysis:** - 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

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1. Record the January 1 credit balance of $26,000 in a T account for Allowance for Doubtful Accounts. 2. Journalize the transactions. Post each entry that affects the following selected T ac- counts and determine the new balances: Allowance for Doubtful Accounts Bad Debt Expense 3. Determine the expected net realizable value of the accounts receivable as of December 31. bacing the provision for uncollectible accountsS on an

1. Record the January 1 credit balance of $26,000 in a T account for Allowance for Doubtful Accounts. 2. Journalize the transactions. Post each entry that affects the following selected T ac- counts and determine the new balances: Allowance for Doubtful Accounts Bad Debt Expense 3. Determine the expected net realizable value of the accounts receivable as of December 31. bacing the provision for uncollectible accountsS on an

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter8: Receivables

Section: Chapter Questions

Problem 17E: Entries for bad debt expense under the direct write-off and allowance methods Casebolt Company wrote...

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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

### PR 8-1A Entries Related to Uncollectible Accounts

#### Subject: Accounting

#### Topic: Handling Uncollectible Accounts

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31:

**Transaction Details:**

- **Feb. 8**: Received 40% of the $18,000 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 $7,350 cash in full payment of Seth’s account.

- **Aug. 13**: Wrote off the $6,400 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 $3,880 cash in full payment of the account.

- **Dec. 31**: Wrote off the following accounts as uncollectible (compound entry):
- Newbauer Co: $7,190
- Bonneville Co: $5,500
- Crow Distributors: $9,400
- Fiber Optics: $1,110

- **Dec. 31**: Based on an analysis of the $1,785,000 of accounts receivable, it was estimated that $35,700 will be uncollectible. Journalized the adjusting entry.

---

### Instructions

1. **Record the January 1 Credit Balance:** Record the January 1 credit balance of $26,000 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
- Bad Debt Expense

3. **Determine the Expected Net Realizable Value:**
- Calculate the expected net realizable value of the accounts receivable as of December 31.

4. **Adjusting Entry Based on Sales Analysis:**
- 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

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View Policies Current Attempt in Progress Voight Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $1,400,000 and $70,000 (Cr.), respectively. An aging of accounts receivable indicated that $128,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is O $198,000. O $128,000. O $58,000. O $70,000. eTextbook and Media Save for Later Attempts: 0 of 2 used Submit Answer 回可

Problem 6-4: The Northrock Corporation The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on October 31, 2021: Year A/R at Year end Uncollectible and written off in subsequent years 2018 14000 700 2019 10000 1000 2020 12000 600 2021 4000 200 Required 1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of total A/R. Round your calculation to two decimal places. 2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1. 3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 4. Scenario B: On October 31, 2021 the unadjusted Allowance for…