### 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 Accounting

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Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter11: Current Liabilities And Payroll

Section: Chapter Questions

Problem 5PA: Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in...

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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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