PR $8-1$A Allowance method entries

Obj. $4$

The following transactions were completed by Irvine Company during the current fiscal year ended December $31$:

Feb. $8.$ Received $40\%$ of the $$18,000$ balance owed by DeCoy Co$,$ a bankrupt business, and wrote off the remainder as uncollectible.

May $27.$ Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of $$7,350$ cash in full payment of Seth's account.

Aug. $13.$ Wrote off the $$6,400$ balance owed by Kat Tracks $C_0,$ which has no assets.

Oct. $31.$ Reinstated the account of Crawford $Co,$ which had been written off in the preceding year as uncollectible. Journalized the receipt of $$3,880$ cash in full payment of the account.

Dec. $31.$ Wrote off the following accounts as uncollectible $($compound entry$)$: Newbauer Ca$,$ $$7,190$; Bonneville Co$,$ $$5,500$; Crow Distributors, $$9,400$; Fiber Optics, $$1,110.$

$31.$ Based on an analysis of the $$1,785,000$ of accounts receivable, it was estimated that $$35,700$ will be uncollectible. Journalized the adjusting entry.

Instructions

Record the January $1$ credit balance of $$26,000$ in a $T$ account for Allowance for Doubtful Accounts.

Journalize the transactions. Post each entry that affects the following selected $T$ accounts and determine the new balances:

Allowance for Doubtful Accounts

Bad Debt Expense