### Accounts Receivable Analysis for Renue Spa#### OverviewAt the end of the fiscal year on December 31, Year 1, the accounts receivable balance for Renue Spa totaled $81,000. Concurrently, the balance in the Allowance for Doubtful Accounts was $2,400. Throughout Year 2, several key accounting activities were undertaken, as detailed below:1. **Write-offs**: Accounts receivable amounting to $2,600 were deemed uncollectible and written off.2. **Recoveries**: Renue unexpectedly recovered $140 from receivables previously written off in an earlier accounting period.3. **Revenue and Collections**: Services provided on account amounted to $215,000, while cash collections from receivables totaled $216,972.4. **Estimates**: Uncollectible accounts expense was estimated to be 1% of the sales on account for the period.#### Required TasksTo ensure accurate financial reporting and analysis, please complete the following:**a. Record Transactions** - Use general journal forms to document each transaction. - Post these transactions to the appropriate T-accounts.**b. Compute Year-End Balances and Values** - After making necessary year-end adjustments, compute the following: 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. Uncollectible Accounts Expense** - Determine the total amount of uncollectible accounts expense that Renue will report for Year 2.It is vital to use detailed T-accounts to accurately reflect each transaction and adjustment. Understanding how to calculate and interpret these elements will be crucial for maintaining the financial health of the company.**Further Exploration**Analyze the implications of the estimates for uncollectible accounts expenses on Renue Spa’s financial health and consider how similar businesses might manage and report uncollectibles. It would be beneficial to explore methodologies for improving the collection processes to minimize future write-offs.

For the purpose of keeping track of commercial transactions, the business entities document them in…

The accounts receivable balance for Renue Spa at December 31, Year 1, was $81,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,400. During Year 2, $2,600 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $140 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 t be 1 percent of the sales on account for the period. Required a. Record the transactions in general journal form and post to T-accounts. 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 report for Year 2?

The accounts receivable balance for Renue Spa at December 31, Year 1, was $81,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,400. During Year 2, $2,600 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $140 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 t be 1 percent of the sales on account for the period. Required a. Record the transactions in general journal form and post to T-accounts. 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 report for Year 2?

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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