Answer:
Quality Book Sales
1) Uncollectible accounts expense for Year 2 = $890
2) Net realizable value of receivables at the end of Year 2 = $69,650
B) The reason why the uncollectible accounts expense amount is different from the amount that was written off as uncollectible is:
(2) Uncollectible accounts expense is the actual amount that was determined in the current accounting period to be uncollectible.
Explanation:
a) Data and Calculations:
Accounts Receivable Balance, January 1, Year 2 = $78,500
Allowance for Doubtful Accounts, January 1, Year 2 = 4,710
Sales on Account, Year 2 = 550,000
Collections of Accounts Receivable, Year 2 = 556,000
Uncollectibles written off = $2,850
Allowance for Uncollectible accounts = 0.5% of Sales ($550,000 * 0.5%)
= $2,750
1) Uncollectible accounts expense for Year 2 = $890 ($2,850 + $2,750 - $4,710)
2) Net realizable value of receivables at the end of Year 2 = $69,650
B) The reason why the uncollectible accounts expense amount is different from the amount that was written off as uncollectible is:
(2) Uncollectible accounts expense is the actual amount that was determined in the current accounting period to be uncollectible.
Accounts Receivable Account
Account Titles Debit Credit
Beginning balance $78,500
Sales 550,000
Cash $556,000
Allowance for Uncollectibles 2,850
Ending balance 69,650
Allowance for Uncollectible Accounts
Account Titles Debit Credit
Beginning balance $4,710
Accounts receivable $2,850
Uncollectible Accounts Expense 890
Ending balance 2,750
