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Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts.

What is the net realizable value of the receivables at the end of the period?

a)Ending balance in Accounts Receivable

b)Ending balance in Allowance for Doubtful Accounts


At the beginning of the current period, Nash's Trading Post, LLC had balances in Accounts Receivable of $201,400 and in Allowance for Doubtful Accounts of $8,570 (credit). During the period, it had net credit sales of $840,400 and collections of $758,910. It wrote off as uncollectible accounts receivable of $8,026. However, a $2,889 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $23,180 at the end of the period. (Omit cost of goods sold entries.)

(a) Prepare the entries to record sales and collections during the period.

(b) Prepare the entry to record the write-off of uncollectible accounts during the period.

(c) Prepare the entries to record the recovery of the uncollectible account during the period.

(d) Prepare the entry to record bad debt expense for the period.

Respuesta :

Answer:

Explanation:

The net realizable values are as follows:

a. For Accounts Receivable

Ending balance of account receivable = Beginning balance of account receivable + credit sales - collections - uncollectible amount

= $201,400 + $840,400 - $758,910 - $8,026

= $274,864

b. For Allowance for Doubtful Accounts

= Beginning balance + previously written off amount - uncollectible amount + bad debt expense

= $8,570 + $2,889 - $8,026 + $19,747

= $23,180  

Now the journal entries are shown below:

a. Accounts receivable A/c $840,400

       To Sales revenue A/c $840,400

(Being the sales is recorded)

Cash A/c Dr $758,910

      To Sales revenue A/c $758,910

(Being the collection  is recorded)

b. Allowance for Doubtful Accounts A/c Dr $8,026

                To Account receivable A/c $8,026

(Being uncollected amount is recorded)

c. Accounts Receivable Dr A/c Dr $2,889

               To Allowance for Doubtful Accounts A/c $2,889

(Being uncollected amount is recorded)

Cash A/c Dr $2,889

           To Accounts Receivable A/c Dr $2,889

(Being recovery of uncollectible amount is recorded)

d.  Bad debt expense A/c Dr $19,747

             To Allowance for doubtful debts  $19,747

(Being bad debt expense is recorded)

The computation is shown below

= $23,180 -  ($8,570 +  $2,889 + $8,026)

= $19,747

anthougo

1) The net realizable value of the receivables at Nash's Trading Post, LLC's end of the period is $252,684.

2.a) Nash's Trading Post, LLC's ending balance in the Accounts Receivable is $274,864.

2.b) Nash's Trading Post, LLC's ending balance in the Allowance for Doubtful Accounts is $23,180.

3. Journal Entries:

a) Debit Accounts Receivable $840,400

Credit Sales Revenue $840,400

  • To record sales for the period.

Debit Cash $758,910

Credit Accounts Receivable $758,910

  • To record collections for the period.

b) Debit Allowance for Doubtful Accounts $8,026

Credit Accounts Receivable $8,026

  • To record a write-off of uncollectible accounts.

c) Debit Accounts Receivable $2,889

Credit Allowance for Doubtful Accounts $2,889

  • To reverse the recovery of an uncollectible account.

Debit Cash $2,889

Credit Accounts Receivable $2,889

  • To record the recovery of an uncollectible account.

d) Debit Bad Debt Expense $19,567

Credit Allowance for Doubtful Accounts $19,567

  • To record bad debt expense for the period.

Data Analysis:

Beginning balances:

Accounts receivable = $201,400

Allowance for Doubtful Accounts = $8,750 (credit)

Net credit sales = $840,400

Collections from customers = $758,910

Amounts written off = $8,026

Written-off account recovered = $2,889

Estimated uncollectible accounts = $23,180

a) Accounts Receivable $840,400 Sales Revenue $840,400

Cash $758,910 Accounts Receivable $758,910

b) Allowance for Doubtful Accounts $8,026 Accounts Receivable $8,026

c) Accounts Receivable $2,889 Allowance for Doubtful Accounts $2,889

Cash $2,889 Accounts Receivable $2,889

d) Bad Debt Expense $19,567 Allowance for Doubtful Accounts $19,567

T-Accounts:

Accounts Receivable

Account Titles                   Debit           Credit

Beginning balance        $201,400

Sales Revenue               840,400

Allowance for Doubtful Accounts      $8,026

Allowance for

 Doubtful Accounts          2,889

Cash                                                      2,889

Cash collections                               758,910

Ending Balance                            $274,864

Totals                      $1,044,689 $1,044,689

Allowance for Doubtful Accounts

Account Titles                   Debit      Credit

Beginning balance                         $8,750

Accounts Receivable     $8,026

Accounts Receivable                       2,889

Bad Debt Expense                       19,567

Ending balance            $23,180

Total                              $31,206 $31,206

  • Net Realizable Value of Receivables = $252,684 ($274,864 - $23,180)

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