Required: Prepare journal entries for each transaction. Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based on the information presented and balance off each account. Prepare the balance sheet extract as at Dec 31 to show the net realizable value for the Accounts Receivable.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Accounting for Assets: Receivables

Johnson company’s financial year ended on December 31, 2010. All the transactions related to the company’s uncollectible accounts are can be found below:

January 15

Wrote of $440 account of Miller Company as uncollectible

 

April 2nd

Re-establish the account of Louisa Teller and record the collection of $1,050 as payment in full for her account which had been written off earlier

 

July 31

Received 40% of the $700 balance owed by William John and wrote off the remainder as uncollectible

 

August 15

Wrote off as uncollectible the accounts of Sherwin Company, $1,700 and V. Vasell $2,200

 

September 26

Received 25% of the $1,140 owed by Grant Company and wrote off the remainder as uncollectible

 

October 16

Received $741 from M. Fuller in full payment of his account which had been written off earlier as uncollectible

 

December 31

Estimated uncollectible accounts expense for the year to be 1.5% of net credit sales of $521,000

 

The accounts receivable account had a balance of $114,630 and the beginning balance in the allowance for uncollectible accounts was $6,200.

Required:

  1. Prepare journal entries for each transaction.
  2. Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based on the information presented and balance off each account.
  3. Prepare the balance sheet extract as at Dec 31 to show the net realizable value for the Accounts Receivable.
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