The following transactions were completed by Interia

Management
The following transactions were completed by Interia Management Company during the current
fiscal year ended December 31:Feb. 24. Received 40% of the $18,000 balance owed by Broudy
Co., a bankrupt business, and wrote off the remainder as uncollectible.May 3. Reinstated the
account of Irma Alonso, which had been written off in the preceding year as uncollectible.
Journalized the receipt of $1,725 cash in full payment of Alonso’s account.Aug. 9. Wrote off the
$3,600 balance owed by Tux Time Co., which has no assets.Nov. 20. Reinstated the account of
Pexis Co., which had been written off in the preceding year as uncollectible. Journalized the
receipt of $6,140 cash in full payment of the account.Dec. 31. Wrote off the following accounts
as uncollectible (compound entry): Siena Co., $2,400; Kommers Co., $1,800; Butte Distributors,
$6,000; Ed Ballantyne, $1,750.31. Based on an analysis of the $768,375 of accounts
receivable, it was estimated that $18,000 will be uncollectible. Journalized the adjusting entry.
Instructions1. Record the January 1 credit balance of $15,500 in a T account for Allowance for
Doubtful Accounts.2. Journalize the transactions. Post each entry that affects the following
selected T accounts and determine the new balances:Allowance for Doubtful AccountsBad Debt
Expense3. Determine the expected net realizable value of the accounts receivable as
ofDecember 31.4. Assuming that instead of basing the provision for uncollectible accounts on
an analysis of receivables, the adjusting entry on December 31 had been based on an
estimated expense of 1/2 of 1% of the net sales of $4,100,000 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.View Solution:
The following transactions were completed by Interia Management
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