The following transactions were completed by Irvine Company during the current fiscal year ended December 31:Feb. 8Received 40% of the $18,000 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible.May 27Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,350 cash in full payment of Seth’s account.Aug. 13Wrote off the $6,400 balance owed by Kat Tracks Co., which has no assets.Oct. 31Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,880 cash in full payment of the account.Dec. 31Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,190; Bonneville Co., $5,500; Crow Distributors, $9,400; Fiber Optics, $1,110.Dec. 31Based on an analysis of the $1,785,000 of accounts receivable, it was estimated that $35,700 will be uncollectible. Journalized the adjusting entry. 1.Record the January 1 credit balance of $26,000 in a T-account for Allowance for Doubtful Accounts.2.A.Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.B.Post each entry that affects the following selected T-accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense.3.Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).4.Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ¼ of 1% of the net sales of $18,200,000 for the year, determine the following:A.Bad debt expense for the year.B.Balance in the allowance account after the adjustment of December 31.C.Expected net realizable value of the accounts receivable as of December 31.Do T accounts as well.

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Asked Nov 5, 2019
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The following transactions were completed by Irvine Company during the current fiscal year ended December 31:
Feb. 8 Received 40% of the $18,000 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible.
May 27 Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,350 cash in full payment of Seth’s account.
Aug. 13 Wrote off the $6,400 balance owed by Kat Tracks Co., which has no assets.
Oct. 31 Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,880 cash in full payment of the account.
Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,190; Bonneville Co., $5,500; Crow Distributors, $9,400; Fiber Optics, $1,110.
Dec. 31 Based on an analysis of the $1,785,000 of accounts receivable, it was estimated that $35,700 will be uncollectible. Journalized the adjusting entry.
 
1. Record the January 1 credit balance of $26,000 in a T-account for Allowance for Doubtful Accounts.
2.
A. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.
B. Post each entry that affects the following selected T-accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense.
3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ¼ of 1% of the net sales of $18,200,000 for the year, determine the following:
A. Bad debt expense for the year.
B. Balance in the allowance account after the adjustment of December 31.
C. Expected net realizable value of the accounts receivable as of December 31.

Do T accounts as well. 

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Expert Answer

Step 1

An allowance for doubtful debt account is prepared to record the amount which have less chances to be receive from debtors.

A bad debt account is prepared to record all those amount from debtors which are not recovered. These become a loss to the company.

Step 2

1)

T account to record balance of allowance for doubtful debt account is as follows:

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Allowance for doubtful account Amount Date (S) Date Particular Particular Amount (S) February January 1 Balance May 27 To cash 8 10,800 6,400 26,000 7,350 August 13 December To account receivable By Account receivable 23,200 3,880 October 31 To account receivable 31 December 35,700 By bad debt expense 31 December To balance 31 32,530 January 1 Bad debt expense account By balance 32,530 Date Particular Amount Date Particular Amount ($) 35,700 (S) December Adjusting entry 31 January 1 To balance December By balance 31 35,700 35,700

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Step 3

2 a)

Journal entries for the trans...

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Debit (S) Credit (S) Account title & explanation Date February Cash (40%x$18.000) 7,200 Allowance for doubtful debt 10,800 ......Account receivable- D (to record receipt & write of uncollectible) 18,000 7,350 May 27 Account receivable S ......Allowance for doubtful account 7,350 (to record reinstatement of account receivable) Cash 7,350 May 27 .....Account receivable S (to record receipt of cash in full payment) 7,350 August 13 Allowance for doubtful account 6.400 Account receivable - K (to record write off of account receivable) Account receivable C 6,400 October 31 3,880 3,880 .Allowance for doubtful account (to record reinstatement of account receivable) Cash October 31 3,880 -....Account receivables C (to record receipt of cash in full payment) 3,880 December Allowance for doubtful account 31 23,200 7,190 Account receivable - N Account receivable - B 5,500 9,400 1,110 ..Account receivable C .Account receivable - F (to record write off of account receivable) December Bad debt expense 31 35.700 35,700 Allowance for doubtful debt account (to record bad debt expenses for the vear)

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