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The following events occur for The Underwood Corporation during 2021 and 2022, its first two years of operations. June 12, 2021 Provide services to customers on account for $38,600. September 17, 2021 Receive $23,000 from customers on account. December 31, 2021 Estimate that 45% of accounts receivable at the end of the year will not be received. March 4, 2022 Provide services to customers on account for $53,600. May 20, 2022 Receive $10,000 from customers for services provided in 2021. July 2, 2022 Write off the remaining amounts owed from services provided in 2021. October 19, 2022 Receive $43,000 from customers for services provided in 2022. December 31, 2022 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.

Respuesta :

anthougo

Answer:

Underwood Corporation

Journal Entries:

                                             Debit            Credit

June 12, 2021:

Accounts Receivable         $38,600

Service Revenue                                      $38,600

To record services to customers on account

Sept. 17, 2021:

Cash Account                    $23,000

Accounts Receivable                               $23,000

To record cash receipt from customers.

Dec. 31, 2021:

Uncollectible Accounts Exp $7,020

Allowance for Doubtful Accounts         $7,200

To record allowance for doubtful accounts.

March 4, 2022:

Accounts Receivable       $53,600

Service Revenue                                   $53,600

To record services to customers on account.

May 20, 2022:

Cash Account                 $10,000

Accounts Receivable                            $10,000

To record cash receipts from customers.

July 2, 2022:

Allowance for Doubtful Accounts $5,600

Accounts Receivable                                      $5,600

To write off the uncollectible balance.

Oct. 19, 2022:

Cash Account                           $43,000

Accounts Receivable                                     $43,000

To record cash receipts from customers.

Dec. 31, 2022:

Uncollectible Accounts Exp $3,170

Allowance for Doubtful Accounts         $3,170

To record allowance for doubtful accounts.

b) Posting Transactions to the accounts:

Cash Account

                                                                     Debit         Credit         Balance

Sept 17, 2021:  Accounts Receivable         $23,000                       $23,000

May 20, 2022:Accounts Receivable         $10,000                        $33,000

Oct. 19, 2022: Accounts Receivable         $43,000                        $76,000

Accounts Receivable

                                                                     Debit            Credit        Balance

June 12, 2021  Service Revenue               $38,600                          $38,600

Sept 17, 2021   Cash                                                        $23,000     $15,600

March 4, 2022 Service Revenue              $53,600                          $69,200

May 20, 2022  Cash                                                       $10,000     $59,200

July 2, 2022     Allowance for Uncollectible                   $5,600     $53,600

Oct. 19, 2022   Cash                                                        $43,000    $10,600

Allowance for Uncollectible Accounts

                                                                             Debit     Credit      Balance

Dec. 31, 2021  Uncollectible Accounts Expense              $7,200     $7,200

July 2, 2022    Accounts Receivable                $5,600                     $1,600

Dec 31, 2022  Uncollectible Accounts Expense             $3,170       $4,770

3. Net Realizable Value of Accounts Receivable at the end of 2021 and 2022:

                                                                  2021               2022

Accounts Receivable Balance              $15,600          $10,600

less Allowance for Doubtful Accounts ($7,200)          ($4,770)

Net Realizable Value                            $8,400           $5,830

Explanation:

a) Allowance for Doubtful is an amount that is estimated which may not be recovered from customers for services rendered.  This allowance is made in order to provide for losses that may arise from credit sales.  The estimated allowance is 45% of the Accounts Receivable Balance at the end of the year.

b) When a write-off of debts occurs, the Allowance for Doubtful Accounts is adjusted with the direct write-off to reduce the balance.

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