May Co. prepared an aging of its accounts receivable at December 31, 2007 and determined that the net realizable value of the receivables was $300,000. Additional information is available as follows:
Allowance for uncollectible accounts at 1/1/07—credit balance $ 34,000
Accounts written off as uncollectible during 2007 23,000
Accounts receivable at 12/31/07 325,000
Uncollectible accounts recovered during 2007 5,000
For the year ended December 31, 2007, May's uncollectible accounts expense would be?

I proceeded in this way: 300,000= total acc receivable - 34,000
so total acc rec is 334,000. Now what should I do? I don't get the difference between allowance and uncollectible account written off.. what should I do with those uncollectible recovered? Thank you

Quote:

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Originally Posted by bibi_baudelaire

May Co. prepared an aging of its accounts receivable at December 31, 2007 and determined that the net realizable value of the receivables was $300,000. Additional information is available as follows:
Allowance for uncollectible accounts at 1/1/07—credit balance $ 34,000
Accounts written off as uncollectible during 2007 23,000
Accounts receivable at 12/31/07 325,000
Uncollectible accounts recovered during 2007 5,000
For the year ended December 31, 2007, May's uncollectible accounts expense would be?

I proceeded in this way: 300,000= total acc receivable - 34,000
so total acc rec is 334,000. Now what should I do? I don't get the difference between allowance and uncollectible account written off.. what should I do with those uncollectible recovered? Thank you

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The point of the exercise is to make an appropriate allowance for uncollectable debts
you have been given some numbers
net realizable value of the receivables was $300,000.
Accounts receivable at 12/31/07 325,000

so whatever else is going on the net result must be to make a minimum allowance of $25,000 so if the writeoffs etc reduce the allowance below $25000 you must adjust it

OK so.. is it correct?

Unc account expense 34,000DR
Allowance for unc account expense 34,000CR

Allowance for unc account DR23,000
Acc receivable CR23,000

Acc receivable 5,000DR
Allowance 5,000CR
Cash 5,000DR
Acc receivable 5,000CR

If it is correct what should I do now?

You have it a little sideways
the balance on the uncollectables account is made up as follows
Opening Balance (journal not needed) 34000 + recoveries 5000 - writeoffs 23000 + adjustment 9000 = closing balance 25000.

You have to decide whether the recoveries were written off or not either they are a current accounts receivable balance or not

and finally what did the question ask you to do? I suggest you make the account names a little clearer, incomprehensible abbreviations will loose you marks