Renue Spa had the following balances as of December 31, Year 1: Accounts receivable was $85,000, allowance for doubtful accountswas $2,600 and total retained earnings at the end of Year 1 was $82,400.During Year 2 the company experienced the following events:1. Accounts receivable in the amount of $1,800 were written off as uncollectible.2. Collected $190 of receivables that had been written off in a previous accounting period.3. Provided $218,000 worth of services on account during Year 2.4. Cash collections from receivables were $220,000 during Year 2.5. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.Requireda. Organize the information in accounts under an accounting equation.b. Based on the preceding information, compute (after year-end adjustment):1. Balance of allowance for doubtful accounts at December 31, Year 2.2. Balance of accounts receivable at December 31, Year 2.3. 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?

Approach to solving the question: calculation for allowance for doubtful account 1 % of sales…

Answered: Renue Spa had the following balances as…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter16: Accounting For Accounts Receivable

Section: Chapter Questions

Problem 3CP: At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in...

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At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in Allowance for Doubtful Accounts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience. Assume that Martel Co.s adjusting entry for uncollectible accounts on December 31, 20-2, was a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts of 25,000. (a) Estimate Martels uncollectible accounts percentage based on its actual bad debt experience during the past two years. (b) Prepare the adjusting entry on December 31, 20-3, for Martel Co.s uncollectible accounts.
Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?
Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Required: 1. Determine the desired post adjustment balance in allowance for doubtful accounts. 2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. 3. Compute bad debt expense. 4. Prepare the adjusting entry to record bad debt expense.
Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Ink Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable. The uncollectible percentage is 3% for the income statement method and 5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $20,254; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Renue Spa had the following balances as of December 31, Year 1: Accounts receivable was $61,000, allowance for doubtful accounts was $3,750 and total retained earnings at the end of Year 1 was $57,250. During Year 2 the company experienced the following events: 1. Accounts receivable in the amount of $2,100 were written off as uncollectible. 2. Collected $500 of receivables that had been written off in a previous accounting period. 3. Provided $215,000 worth of services on account during Year 2. 4. Cash collections from receivables were $218,000 during Year 2. 5. Uncollectible accounts expense was estimated to be 2 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. Balance of allowance for doubtful accounts at December 31, Year 2. 2. Balance of accounts receivable at December 31, Year 2. 3. Net realizable value of accounts receivable…
The accounts receivable balance for Renue Spa at December 31, Year 1, was $88,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,900. Total retained earnings at the end of Year 1 was $85,100. During Year 2, $1,900 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 $213,000, and cash collections from receivables were $214,954. 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…
The accounts receivable balance for Renue Spa at December 31, Year 1, was $86,000. 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 $83,700. During Year 2, $2,600 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $130 of receivables that had been written off in a previous accounting period. Services provided on account during Year 2 were $214,000, and cash collections from receivables were $215,963. 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…
McKensie Company’s Accounts Receivable balance at December 31 was $100,000, and there was a negative balance of $600 in the Allowance for Uncollectible Accounts. The firm estimates that 3% of the Accounts Receivable will prove to be uncollectible. After the appropriate adjusting entry is made for credit losses, what is the net amount of accounts receivable included in the current assets at year-end? Select one: a. $87,900 b. $86,700 c. $97,000 d. $90,000 e. None of the above
Bourne Company had a $150,000 beginning balance in Accounts Receivable and a $6,000 credit balance in the Allowance for Doubtful Accounts. During the year, credit sales were $ 600,000 and customers' accounts collected were $590, 000. Also, $4,000 in worthless accounts were written off. What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for doubtful accounts? Select one: A. $120,000 B. $130, 000 C. $126,000 D. $154,000
Renue Spa had the following balances at December 31, Year 2: Cash of $11,000, Accounts Receivable of $ 87,000, Allowance for Doubtful Accounts of $2,500, and Retained Earnings of $95, 500. During Year 3, the following events occurred: $2,100 of accounts receivable were written off as uncollectible. The company unexpectedly collected $200 of receivables that had been written off in a previous accounting period. Services provided on account during Year 3 were $214,000. Cash collections from receivables were $215,963. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Required: Organize the transaction data in accounts under an accounting equation. Based on the preceding information, compute (after year-end adjustment): (1) Balance of Allowance for Doubtful Accounts at December 31, Year 3. (2) Balance of Accounts Receivable at December 31, Year 3 (3) Net realizable value of Accounts Receivable at December 31, Year 3. What amount of…

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