Question

The following events occur for The Underwood Corporation during 2015 and 2016, its first two years of operations.

June 12, 2015 Provide services to customers on account for $40,400.
September 17, 2015 Receive $24,500 from customers on account.
December 31, 2015 Estimate that 45% of accounts receivable at the end of the year will not be received.
March 4, 2016 Provide services to customers on account for $55,400.
May 20, 2016 Receive $10,000 from customers for services provided in 2015.
July 2, 2016 Write off the remaining amounts owed from services provided in 2015.
October 19, 2016 Receive $44,500 from customers for services provided in 2016.
December 31, 2016
Estimate that 45% of accounts receivable at the end of the year will not be received.

Required:
1.
Record transactions for each date. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2.
Post transactions to the following accounts: Cash, Accounts Receivable, and Allowance for Uncollectible Accounts.

3.
Calculate the net realizable value of accounts receivable at the end of 2015 and 2016.

Answer 1

Answer:

Explanation:

12-June

Dr Accounts revenue $40,400

   Cr Service revenue $40,400

17- September

Dr Cash $24,500

    Cr Accounts receivable $24,500

31- December

Dr Bad debt expense $7,155 [(40,400-24,500)*45%]

    Cr Allowance for uncollectible accounts $7,155

4- March

Dr Accounts receivable $55,400

    Cr Service revenue $55,400

20- May

Dr Cash $10,000

   Cr Accounts receivable $10,000

2- July

Dr Allowance for uncollectible accounts $5900    

    Cr Accounts receivable [40400-24,500-10,000] $5,900  

     

19- Oct

Dr Cash    $44,500    

   Cr Accounts receivable   $44,500

 

31- Dec

Dr Bad debts expense   $3,650    

 Cr Allowance for uncollectible accounts[(55,400-44,500)*45%-1255] 3,650

3.

2015:

total accounts receivable  15,900    

allowance for uncollectible accounts 7,155    

net realizable value   8745 [15,900-7,155]

2016:

total accounts receivable  10,900

allowance for uncollectible accounts 4,905

net realizable value   5995 [10,900-4,905]