Ace Company uses the Aging of receivables method to account for uncollectible accounts. The company had the following balances on January 01, 2019.Part AAccounts receivable...........................................$2,800,000Allowance for uncollectible accounts...................$88,800 (credit) The company completed the following transactions during 2019.April 20-- Wrote off the balance of $1,000 from Shari Wickham’s account as uncollectible. November 27- Re-instated the account of Louis Benn and recorded the collection of $1,500 as payment in full for her account which had been written off earlier. December 31st-Recorded the uncollectible account expense based on the aging schedule. The schedule showed that $124,500 of accounts receivable was estimated as uncollectible.Made the closing entry for the uncollectible expense account. Requirements:Prepare journal entries for each transaction (No narrations required)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, 2019, to show the net realizable value for the Accounts Receivable. Part BThe company completed the following transactions during 2020.Jan 10 sold inventory to Natty Paul, $11,000, on accountMay 15 wrote off as uncollectible the accounts of Terry Carter, $2,500 and Maggie Cube $400August 04 received 70% of the amount owed by Natty Paul and wrote off the remainder as uncollectibleOctober 26 received 30% of the funds owed from Maggie Cube as part payment of her account which had been written off earlier as uncollectible.December 31, The Aging schedule showed an estimated $116,500 as uncollectibleRequirements:Prepare journal entries for each transaction (No narrations required)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, 2020, to show the net realizable value for the Accounts Receivable.Assume credit sales for 2019 were $312,000 and that on December 31, 10% of credit sales are estimated to be uncollectible. Using the percentage of sales method:Determine the amount to be charged to the uncollectible expense account.Prepare the Allowance for uncollectible account.Prepare the balance sheet extract to show the net realizable value of the Accounts Receivable as at December 31.

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11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter14: Accounting For Uncollectible Accounts Receivable

Section: Chapter Questions

Problem 1AP

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Question

Ace Company uses the Aging of receivables method to account for uncollectible accounts. The company had the following balances on January 01, 2019.

Part A

Accounts receivable...........................................$2,800,000

Allowance for uncollectible accounts...................$88,800 (credit)

The company completed the following transactions during 2019.

April 20^-- Wrote off the balance of $1,000 from Shari Wickham’s account as uncollectible.

November 27^- Re-instated the account of Louis Benn and recorded the collection of $1,500 as payment in full for her account which had been written off earlier.

Recorded the uncollectible account expense based on the aging schedule. The schedule showed that $124,500 of accounts receivable was estimated as uncollectible.
Made the closing entry for the uncollectible expense account.

Requirements:

Prepare journal entries for each transaction (No narrations required)
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, 2019, to show the net realizable value for the Accounts Receivable.

Part B

The company completed the following transactions during 2020.

Jan 10 sold inventory to Natty Paul, $11,000, on account
May 15 wrote off as uncollectible the accounts of Terry Carter, $2,500 and Maggie Cube $400
August 04 received 70% of the amount owed by Natty Paul and wrote off the remainder as uncollectible
October 26 received 30% of the funds owed from Maggie Cube as part payment of her account which had been written off earlier as uncollectible.
December 31, The Aging schedule showed an estimated $116,500 as uncollectible

Requirements:

Prepare journal entries for each transaction (No narrations required)
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, 2020, to show the net realizable value for the Accounts Receivable.
Assume credit sales for 2019 were $312,000 and that on December 31, 10% of credit sales are estimated to be uncollectible. Using the percentage of sales method:
Determine the amount to be charged to the uncollectible expense account.
Prepare the Allowance for uncollectible account.

Prepare the balance sheet extract to show the net realizable value of the Accounts Receivable as at December 31.

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