Sagot :
The year-end adjustments at December 31, Year 2 that Renue Spa should compute are as follows:
1. Balance for Allowance for Doubtful Accounts is = $4,360
2. Balance of Accounts Receivable is = $55,900
3. Net realizable value of Accounts Receivable at December 31, Year is = $51,540 ($55,900 - $4,360)
4. Uncollectible accounts expense for Year 2 is $2,210.
Data and Calculations:
Balances at December 31, Year 1:
Accounts Receivable = $61,000
Allowance for doubtful accounts balance = $3,750
Retained Earnings = $57,250
Analysis of Year 2 Transactions:
Allowance for Doubtful Accounts $2,100 Accounts Receivable $2,100
Accounts Receivable $500 Allowance for Doubtful Accounts $500
Cash $500 Accounts Receivable $500
Accounts Receivable $215,000 Service Revenue $215,000
Cash $218,000 Accounts Receivable $218,000
Bad Debts Expense $2,210 Allowance for Doubtful Accounts $2,210
Allowance for Doubtful Accounts ending balance = $4,360 ($218,000 x 2%)
T-Accounts:
Accounts Receivable
Account Titles Debit Credit
Year 2 Beginning Balance $61,000
Allowance for doubtful $2,100
Allowance for doubtful 500
Cash 500
Service Revenue 215,000
Cash 218,000
Year 2 Ending Balance $55,900
Allowance for Doubtful Accounts
Account Titles Debit Credit
Year 2 Beginning Balance $3,750
Accounts Receivable $2,100
Accounts Receivable 500
Bad Debts Expense 2,210
Year 2 Ending Balance $4,360
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