Arcade Systems Ltd. had the following account balances on October 1, 2015: Accounts Receivable, $132,304; Allowance for Doubtful Accounts, $(8,350). Arcade Systems completed the following selected transactions during the final month of the current fiscal year:
Oct. 4. Invoiced Chamber Company for $28,760 of services.
15. Received $2,500 as partial payment on the $4,000 account of Steve Walker.
Wrote off the remaining balance as uncollectible.
18. Received a $6,000 deposit for systems work to be performed in November for Templeton Ltd.
25. Received $500 from Steve Walker, which had been written off on October 15.
Reinstated $500 of the account and recorded the cash receipt.
31. Wrote off the following accounts as uncollectible (record as a compound journal entry):
Oak Furnishings .......... $1,075
Weavers Guild Ltd. ........ 2,346
T. Thomas ............. 900
31. Arcade Systems Ltd. uses the percent of sales method of estimating uncollectible accounts expense. Based on past history, 1.5% of sales are expected to be uncollectible. Arcade Systems Ltd. recorded sales of $745,200 during 2015.
Instructions
1. Record the October 1 balances in T accounts for Accounts Receivable and for Allowance for Doubtful Accounts.
2. Journalize the transactions. Post each entry that affects the above-mentioned T accounts and determine the new balances.
3. Determine the net realizable value of the accounts receivable as at October 31, 2015.