Pevenue method to account for uncollectible accounts expense The accounts receivable balance for Renue Spa at December 31, Year 1, was $82,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,300. Total retained earnings at the end of Year 1 was $79,700. During Year 2, $2,400 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $170 of receivables that had been written off in a previous accounting period. Services provided on account during Year 2 were $215,000, and cash collections from receivables were $216,972. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Required a. Organize the information in accounts under an accounting equation. b. Based on the preceding information, compute (after year-end adjustment): 1. (1) Balance of Allowance for Doubtful Accounts at December 31, Year 2. 2. (2) Balance of Accounts Receivable at December 31, Year 2. 3. (3) Net realizable value of Accounts Receivable at December 31, Year 2. c. What amount of uncollectible accounts expense will Renue Spa record for Year 2?
Pevenue method to account for uncollectible accounts expense The accounts receivable balance for Renue Spa at December 31, Year 1, was $82,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,300. Total retained earnings at the end of Year 1 was $79,700. During Year 2, $2,400 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $170 of receivables that had been written off in a previous accounting period. Services provided on account during Year 2 were $215,000, and cash collections from receivables were $216,972. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Required a. Organize the information in accounts under an accounting equation. b. Based on the preceding information, compute (after year-end adjustment): 1. (1) Balance of Allowance for Doubtful Accounts at December 31, Year 2. 2. (2) Balance of Accounts Receivable at December 31, Year 2. 3. (3) Net realizable value of Accounts Receivable at December 31, Year 2. c. What amount of uncollectible accounts expense will Renue Spa record for Year 2?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:the percent of revenue method to account for uncollectible accounts expense
The accounts receivable balance for Renue Spa at December 31, Year 1, was $82,000. Also on that date, the balance in the
Allowance for Doubtful Accounts was $2,300. Total retained earnings at the end of Year 1 was $79,700. During Year 2,
$2,400 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $170 of
receivables that had been written off in a previous accounting period. Services provided on account during Year 2 were
$215,000, and cash collections from receivables were $216,972. Uncollectible accounts expense was estimated to be 1
percent of the sales on account for the period.
Required
a. Organize the information in accounts under an accounting equation.
b. Based on the preceding information, compute (after year-end adjustment):
1. (1) Balance of Allowance for Doubtful Accounts at December 31, Year 2.
2. (2) Balance of Accounts Receivable at December 31, Year 2.
3. (3) Net realizable value of Accounts Receivable at December 31, Year 2.
c. What amount of uncollectible accounts expense will Renue Spa record for Year 2?
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