a) Journalize the entries to record the following (1) Record the adjusting entry at December 31, the end of the fiscal year, to provide for doubtful accounts. The accounts receivable account has a balance of $800,000, and the contra asset account before adjustment has a debit balance of $600. Analysis of the receivables indicates doubtful accounts of $18,000. (2) In March of the following fiscal year, the $350 owed by Fronk Co. on account is written off as uncollectible (3) Eight months later, $200 of the Fronk Co. account is reinstated and payment of that amount is received. (4) In October, $400 is received on the $600 owed by Dodger Co. and the remainder is written off as uncollectible. (b) Based on the data in (a) (1) above, what is the net realizable value of the accounts receivable as reported on the balance sheet as of December 31? (c) Assuming that the business had been following the direct write-off procedure in accounting for uncollectible receivables, journalize the entries to record the following: (1) Recorded write-off of account of Fronk Co. [(a) (2) above]. (2) Reinstated account of Fronk Co. for $200 and recorded payment of that amount received [(a) (3) above]. (3) Recorded the receipt of $400 from Dodger Co. in (a) (4) above and wrote off the remainder owed as uncollectible.
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.
(a)
(1) Record the
(2) In March of the following fiscal year, the $350 owed by Fronk Co. on account is written off as uncollectible
(3) Eight months later, $200 of the Fronk Co. account is reinstated and payment of that amount is received.
(4) In October, $400 is received on the $600 owed by Dodger Co. and the remainder is written off as uncollectible.
(b) Based on the data in (a) (1) above, what is the net realizable value of the accounts receivable as reported on the
(c) Assuming that the business had been following the direct write-off procedure in accounting for uncollectible receivables, journalize the entries to record the following:
(1) Recorded write-off of account of Fronk Co. [(a) (2) above].
(2) Reinstated account of Fronk Co. for $200 and recorded payment of that amount received [(a) (3) above].
(3) Recorded the receipt of $400 from Dodger Co. in (a) (4) above and wrote off the remainder owed as uncollectible.
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