Quality Watches completed the following selected transactions during 2012 and 2013:
2012
Dec 31 Estimated that uncollectible account expense for the year was 2% of credit sales of $450,000 and recorded that amount as expense. Use the allowance method.
31 Made the closing entry for uncollectible account expense.
2013
Jan 17 Sold inventory to Malcom Monet, $700, on account. Ignore cost of goods sold.
Jun 29 Wrote off Malcom Monet’s account as uncollectible after repeated efforts to collect from him.
Aug 6 Received $700 from Malcom Monet, along with a letter apologizing for being so late. Reinstated Monet’s account in full and recorded the cash receipt.
Dec 31 Made a compound entry to write off the following accounts as uncollectible: Brian Kemper, $1,600; May Milford, $1,000; and Ronald Richter, $400.
31 Estimated that uncollectible account expense for the year was 2% on credit sales of $460,000 and recorded the expense.
31 Made the closing entry for uncollectible account expense.
Requirements
1. Open T-accounts for Allowance for uncollectible accounts and Uncollectible account expense. Keep running balances, assuming all accounts begin with a zero balance.
2. Record the transactions in the general journal, and post to the two T-accounts.
3. Assume the December 31, 2013, balance of Accounts receivable is $135,000. Show how net Accounts receivable would be reported on the balance sheet at that date. Use the three line format of reporting the net accounts receivable.