Required: 1. Organize the transaction data in accounts under an accounting equation. 2. 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. 3. What amount of uncollectible accounts expense will Renue Spa have for Year 3?
Required: 1. Organize the transaction data in accounts under an accounting equation. 2. 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. 3. What amount of uncollectible accounts expense will Renue Spa have for Year 3?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Renue Spa had the following balances at December 31, Year 2: Cash of $13,000, Accounts Receivable of $84,000, Allowance for
Doubtful Accounts of $2,400, and Retained Earnings of $94,600. During Year 3, the following events occurred:
1. $2,600 of accounts receivable were written off as uncollectible.
2. Renue unexpectedly collected $130 of receivables that had been written off in a previous accounting period.
3. Services provided on account during Year 3 were $221,000.
4. Cash collections from receivables were $223,028.
5. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.
Required:
1. Organize the transaction data in accounts under an accounting equation.
2. 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.
3. What amount of uncollectible accounts expense will Renue Spa have for Year 3?
Transcribed Image Text:✓
Req A
Organize the transaction data in accounts under an accounting equation.
Note: Enter any decreases to account balances with a minus sign. Not all cells require input.
m
Event
Balance
1.
2a.
2b.
3.
4.
5.
Balance
Req B and C
Req A
Cash
Assets
NRV Accounts
Receivable
+
0+
RENUE SPA
Accounting Equation
b(1). Allowance for doubtful accounts
b(2). Accounts receivable
b(3). Net realizable value
c. Uncollectible accounts expense
Equity
Liabilities + Retained
Earnings
0
Re B and C
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 uncollectible accounts expense will Renue Spa have for Year 3?
Account Titles for Retained Earnings
< Req A
Den Band
Req B and C >
Show less A
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