Ace Company uses the Aging of receivables method to account for uncollectible accounts. The company had the following balances on January 01, 2019. Part A Accounts receivable...........................................$2,800,000 Allowance for uncollectible accounts...................$88,800 (credit) The company completed the following transactions during 2019. April 20-- Wrote off the balance of $1,000 from Shari Wickham’s account as uncollectible. November 27- Re-instated the account of Louis Benn and recorded the collection of $1,500 as payment in full for her account which had been written off earlier. December 31sti. Recorded the uncollectible account expense based on the aging schedule. The schedule showed that $124,500 of accounts receivable was estimated as uncollectible. ii. Made the closing entry for the uncollectible expense account. Requirements: 1. Prepare journal entries for each transaction (No narrations required) 2. Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based on the information presented and balance off each account. 3. Prepare the balance sheet extract as at Dec 31, 2019, to show the net realizable value for the Accounts Receivable.
Ace Company uses the Aging of receivables method to account for uncollectible accounts. The
company had the following balances on January 01, 2019.
Part A
Accounts receivable...........................................$2,800,000
Allowance for uncollectible accounts...................$88,800 (credit)
The company completed the following transactions during 2019.
April 20-- Wrote off the balance of $1,000 from Shari Wickham’s account as
uncollectible.
November 27- Re-instated the account of Louis Benn and recorded the collection of
$1,500 as payment in full for her account which had been written off earlier.
December 31sti. Recorded the uncollectible account expense based on the aging schedule. The
schedule showed that $124,500 of accounts receivable was estimated as
uncollectible.
ii. Made the closing entry for the uncollectible expense account.
Requirements:
1. Prepare
2. Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based on
the information presented and balance off each account.
3. Prepare the balance sheet extract as at Dec 31, 2019, to show the net realizable value for
the Accounts Receivable.
Part B
The company completed the following transactions during 2020.
Jan 10 sold inventory to Natty Paul, $11,000, on account
May 15 wrote off as uncollectible the accounts of Terry Carter, $2,500 and Maggie Cube
$400
August 04 received 70% of the amount owed by Natty Paul and wrote off the remainder
as uncollectible
October 26 received 30% of the funds owed from Maggie Cube as part payment of her
account which had been written off earlier as uncollectible.
December 31, The Aging schedule showed an estimated $116,500 as uncollectible
Requirements:
1. Prepare journal entries for each transaction (No narrations required)
2. Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based
on the information presented and balance off each account.
3. Prepare the balance sheet extract as at Dec 31, 2020, to show the net realizable value
for the Accounts Receivable.
4. Assume credit sales for 2019 were $312,000 and that on December 31, 10% of credit
sales are estimated to be uncollectible. Using the percentage of sales method:
i. Determine the amount to be charged to the uncollectible expense
account.
ii. Prepare the Allowance for uncollectible account.
iii. Prepare the balance sheet extract to show the net realizable value of
the Accounts Receivable as at December 31
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