Question

A partial balance sheet of Rocky Mount Wholesale Florist is provided following.
Rocky Mount Wholesale Florist
Partial Balance Sheet
December 31, 2008
Accounts Receivable..................................................... $105,000
Allowance for Uncollectible Accounts.......................... (3,150)
Net Realizable Value................................................. $101,850
During 2009, $2,450,000 was charged to accounts receivable, and $2,175,000 was paid on the account by customers. Also during 2009, Rocky Mount Wholesale Florist wrote off the following uncollectible accounts:
Required:
(a) Record the journal entries to write off the three uncollectible accounts.
(b) Prepare a T-account for the Allowance account and calculate the balance on December 31, 2009. How should that balance be interpreted?
(c) Prepare a T-account for Accounts Receivable and calculate the balance on December 31, 2009.
(d) Rocky Mount Wholesale Florist estimates that 4 percent of the accounts receivable balance will be uncollectible. What amount is estimated to be uncollectible at the end of 2009? What amount would be considered the net realizable value of the receivables?
(e) Rocky Mount Wholesale Florist wants to prepare an adjusting entry for uncollectible accounts that will make the net realizable value equal to the amount calculated in part (d). Prepare the journal entry to record the estimated uncollectible accounts. (Hint: The amount calculated as uncollectible will not be the amount used in the journal entry.)


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  • CreatedMarch 27, 2015
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