PR 9-1A Entries for receipt and dishonor of note receivable
The following transactions were completed by Axiom Management Company during the current
year ended December 31:

Feb. 17 Received 25% of the $30,000 balance owed by Gillespie Co. a bankrupt
business, and wrote off the remainder as uncollectible.
Apr. 11 Reinstated the account of Colleen Bertram, which had been written off in
the preceding year as uncollectible. Journalize the receipt of $4,250 cash
in full payment of Colleen's account.

July 6. Wrote off the $9,000 balance owed by Covered Wagon Co. which has no assets.

Nov. 20. Reinstated the account of Dugan Co. which had been written off in the
preceding year as uncollectible. Journalized the receipt of $5,900 cash in
full payment of the account.

Dec. 31. Wrote off the following as uncollectible (compound entry): Kipp Co. $3,000; Moore Co. $4,000; Butte Distributors, $8,000; Parker Towers, $6,700.
31 Based on an analysis of the $1,200,000 of accounts receivable, it was
estimated that $60,000 will be uncollectible. Journalized the adjusting
entry.

1. Record the January 1 credit balance of $40,000 in a T account for Allowance for
Doubtful Accounts.

2. Journaize the transactions. Post each entry that affects the following selected T
Accounts and determine the new balances:
Allowance for Doubtful Accounts
Bad Debt Expense

3. Determine the expected net realizable value of the accounts receivable as of
December 31.

4. Assuming that instead of basing the provision for uncollectible accounts on an
analysis of the adjusting entry on December 31 had been based on an estimated
expense of 3/4 of 1% of the net receivables, sales of %7,500,000 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.

Bare in mind that this site is not a homework service. Post your attempt and we'll see how we can help you :)

Just answer the last journal entry that stuff is confusing. Ive been at it for a few hours and Im sick of hearing do it on your own. Im here to learn not be told do it yourself. " 31 Based on an analysis of the $1,200,000 of accounts receivable, it was
estimated that $60,000 will be uncollectible. Journalized the adjusting
entry. " Why is this not just $60,000!!

Quote:

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Originally Posted by Derk618

Just answer the last journal entry that stuff is confusing. Ive been at it for a few hours and Im sick of hearing do it on your own. Im here to learn not be told do it yourself. " 31 Based on an analysis of the $1,200,000 of accounts receivable, it was
estimated that $60,000 will be uncollectible. Journalized the adjusting
entry. " Why is this not just $60,000!?!?!?

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We are not asking anyone to do it on their own, we are asking them to try it first. There is a huge difference between those two.

And what do you mean by 'Why is this not just $60,000?'. The accountant in the question did his/her analysis and from there came up with that number and this is what you have to use.

Sorry I was really frustrated by this question and of course my professor was no help.

I was going through all of it and I got down to the adjusting entry and could not figure it out.
I had my test today but I would still like to know how to do this specific question. What would the adjusting entry be?
Debit to Allowance for Doubtful accounts? I'm not even sure where to begin.

Since the $60,000 was determined uncollectible, it's bad debts and should be written off. How do you usually write off the debts?