The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31: Jan. 19. Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,565 cash in full payment of Arlene’s account. Apr. 3. Wrote off the $8,970 balance owed by Premier GS Co., which is bankrupt. July 16. Received 30% of the $16,100 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. Nov. 23. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,550 cash in full payment. Dec. 31. Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$6,745; Fogle Co., $2,005; Lake Furniture, $5,150; Melinda Shryer, $1,455. Dec. 31. Based on an analysis of the $793,500 of accounts receivable, it was estimated that $34,500 will be uncollectible. Journalized the adjusting entry. Required: 1. Record the January 1 credit balance of $32,900 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts. 2. a. Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $793,500 balance in accounts receivable reflects the adjustments made during the year. Jan. 19-reinstate Jan. 19-collection Apr. 3 July 16 Nov. 23-reinstate Nov. 23-collection Dec. 31-write-off Dec. 31-adjusting 2. b. Post each entry that affects the following T accounts and determine the new balances: Allowance for Doubtful Accounts Jan. 1 Balance Dec. 31 Adjusted Balance 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).
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31:
| Jan. 19. | Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,565 cash in full payment of Arlene’s account. |
| Apr. 3. | Wrote off the $8,970 balance owed by Premier GS Co., which is bankrupt. |
| July 16. | Received 30% of the $16,100 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. |
| Nov. 23. | Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $2,550 cash in full payment. |
| Dec. 31. | Wrote off the following accounts as uncollectible (one entry): Cavey Co.,$6,745; Fogle Co., $2,005; Lake Furniture, $5,150; Melinda Shryer, $1,455. |
| Dec. 31. | Based on an analysis of the $793,500 of accounts receivable, it was estimated that $34,500 will be uncollectible. Journalized the |
Required:
1. Record the January 1 credit balance of $32,900 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts.
2. a. Journalize the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $793,500 balance in accounts receivable reflects the adjustments made during the year.
| Jan. 19-reinstate | |||
| Jan. 19-collection | |||
| Apr. 3 | |||
| July 16 | |||
| Nov. 23-reinstate | |||
| Nov. 23-collection | |||
| Dec. 31-write-off | |||
| Dec. 31-adjusting | |||
2. b.
| Allowance for Doubtful Accounts | |||
|---|---|---|---|
| Jan. 1 Balance | |||
| Dec. 31 Adjusted Balance |
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 ½ of 1% of the sales of $4,900,000 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 (after all of the adjustments and the adjusting entry).
Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and specify the other subparts (up to 3) you’d like answered.
Journal entries are recording of the transaction in the accounting journal in a chronological order. The entries are recorded as the Debit balances and Credit balances.
The golden rules of accounting that are needed to be kept in mind for journalizing:
- Personal account: The receiver needs to be debit; the giver needs to be credit.
- Real account: What comes in needs to be debit; what goes out needs to be credit”
- Nominal account: All expenses and losses need to be debit; all incomes and gains needs to be credit.”
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