Entries Related to Uncollectible AccountsThe following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31:Jan. 19.Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,630 cash in full payment of Arlene’s account.Apr. 3.Wrote off the $9,340 balance owed by Premier GS Co., which is bankrupt.July 16.Received 25% of the $16,800 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible.Nov. 23.Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,655 cash in full payment.Dec. 31.Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$7,025; Fogle Co., $2,085; Lake Furniture, $5,365; Melinda Shryer, $1,515.Dec. 31.Based on an analysis of the $825,700 of accounts receivable, it was estimated that $35,900 will be uncollectible. Journalized the adjusting entry.I need assistance with the following problems in the images. **Transcription for Educational Website:**### Dec. 31 - Adjusting Entries**Bad Debt Expense** - Amount: 16,514 - Status: Incorrect (X) **Allowance for Doubtful Accounts** - Amount: 16,514 - Status: Incorrect (X) ---**Feedback***Check My Work* - Set up T accounts. - Recall that under the allowance method, the entry to write off an account debits Allowance for Doubtful Accounts and credits Accounts Receivable. - In cases where an account receivable that has been written off is later collected, the account is reinstated by an entry that reverses the write-off. - The amount of bad debt expense is affected by the balance in the allowance account.---### 2. b. T Accounts Posting and Balances**Post each entry that affects the following T accounts and determine the new balances:****Allowance for Doubtful Accounts**| Date | Debit Amount | Credit Amount | Balance | Status ||------------|--------------|---------------|----------|---------|| Jan. 1 | | 34,200 | | Correct (✔) || Apr. 3 | 9,340 | | | Correct (✔) || Jan. 19 | | 1,630 | | Correct (✔) || July 16 | 12,600 | | | Correct (✔) || Nov. 23 | | 2,655 | | Correct (✔) || Dec. 31 | 15,990 | | | Correct (✔) || Dec. 31 Unadjusted Balance | | 35,900 | | Incorrect (X) || Dec. 31 Adjusting Entry | | 35,900 | | Incorrect (X) || Dec. 31 Adjusted Balance | | 789,800 | | Incorrect (X) | **Understanding Bad Debt and Allowance for Uncollectibles**When preparing financial statements, determining the provision for uncollectible accounts is a key step. Consider this scenario:4. 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 ½ of 1% of the sales of $5,100,000 for the year, determine the following:a. **Bad Debt Expense for the Year:** - Calculated as: - $ \frac{1}{2} \% $ of $5,100,000 - **$25,500** ✓b. **Balance in the Allowance Account After Adjustment on December 31:** - Example Estimated Balance: - **$789,800** ✗c. **Expected Net Realizable Value of Accounts Receivable as of December 31:** - After all adjustments and the adjusting entry: - **$789,800** ✗These calculations help ensure that financial statements more accurately reflect potential losses from uncollectible accounts.

Accounts receivable: It is a current asset of an organization. It is the amount due from customers for sale of merchandise or for providing services on credit to them. Bad debt expense: It is an expense that arises as a result of non-payment of receivables due by a customer. It is the amount of receivable that the customer does not pay. Allowance for doubtful accounts: It is a contra asset. It is deducted from the accounts receivable to find out the net value of accounts receivable. The allowance is the estimate made by a company of accounts receivable which are expected to be uncollectible.

Answered: Entries Related to Uncollectible…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Entries Related to Uncollectible Accounts

The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31:

Jan. 19.	Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,630 cash in full payment of Arlene’s account.
Apr. 3.	Wrote off the $9,340 balance owed by Premier GS Co., which is bankrupt.
July 16.	Received 25% of the $16,800 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible.
Nov. 23.	Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,655 cash in full payment.
Dec. 31.	Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$7,025; Fogle Co., $2,085; Lake Furniture, $5,365; Melinda Shryer, $1,515.
Dec. 31.	Based on an analysis of the $825,700 of accounts receivable, it was estimated that $35,900 will be uncollectible. Journalized the adjusting entry.

I need assistance with the following problems in the images.

**Transcription for Educational Website:**

### Dec. 31 - Adjusting Entries

**Bad Debt Expense**
- Amount: 16,514
- Status: Incorrect (X)

**Allowance for Doubtful Accounts**
- Amount: 16,514
- Status: Incorrect (X)

---

**Feedback**

*Check My Work*
- Set up T accounts.
- Recall that under the allowance method, the entry to write off an account debits Allowance for Doubtful Accounts and credits Accounts Receivable.
- In cases where an account receivable that has been written off is later collected, the account is reinstated by an entry that reverses the write-off.
- The amount of bad debt expense is affected by the balance in the allowance account.

---

### 2. b. T Accounts Posting and Balances

**Post each entry that affects the following T accounts and determine the new balances:**

**Allowance for Doubtful Accounts**

| Date | Debit Amount | Credit Amount | Balance | Status |
|------------|--------------|---------------|----------|---------|
| Jan. 1 | | 34,200 | | Correct (✔) |
| Apr. 3 | 9,340 | | | Correct (✔) |
| Jan. 19 | | 1,630 | | Correct (✔) |
| July 16 | 12,600 | | | Correct (✔) |
| Nov. 23 | | 2,655 | | Correct (✔) |
| Dec. 31 | 15,990 | | | Correct (✔) |
| Dec. 31 Unadjusted Balance | | 35,900 | | Incorrect (X) |
| Dec. 31 Adjusting Entry | | 35,900 | | Incorrect (X) |
| Dec. 31 Adjusted Balance | | 789,800 | | Incorrect (X) |

**Understanding Bad Debt and Allowance for Uncollectibles**

When preparing financial statements, determining the provision for uncollectible accounts is a key step. Consider this scenario:

4. 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 ½ of 1% of the sales of $5,100,000 for the year, determine the following:

a. **Bad Debt Expense for the Year:**
- Calculated as:
- $ \frac{1}{2} \% $ of $5,100,000
- **$25,500** ✓

b. **Balance in the Allowance Account After Adjustment on December 31:**
- Example Estimated Balance:
- **$789,800** ✗

c. **Expected Net Realizable Value of Accounts Receivable as of December 31:**
- After all adjustments and the adjusting entry:
- **$789,800** ✗

These calculations help ensure that financial statements more accurately reflect potential losses from uncollectible accounts.

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