The accounts receivable balance for Renue Spa at December 31, 2015, was $81,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,900. During 2016, $2,700 of accounts receivable were written off as uncollectible.

The accounts receivable balance for Renue Spa at December 31, 2015, was $81,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,900. During 2016, $2,700 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $180 of receivables that had been written off in a previous accounting period. Services provided on account during 2016 were $211,000, and cash collections from receivables were $212,936. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.


Required:
a.     Record the transactions in general journal form and post to T-accounts.



 

b.	Based on the preceding information, compute (after year-end adjustment):
	(1) Balance of allowance for doubtful accounts at December 31, 2016.
	(2) Balance of accounts receivable at December 31, 2016.
	(3) Net realizable value of accounts receivable at December 31, 2016.

 

Explanation
a.

2016 transactions:

1.	Uncollectible accounts written off	$	2,700
2a.	Reinstated previously written-off accounts		180
2b.	Collected reinstated accounts		180
3.	Services on account		211,000
4.	Collections of accounts receivable		212,936
5.	Uncollectible Accounts Expense ($211,000 × 1%):		2,110

b.
Net Realizable Value: ($76,364 – $2,490) = $73,874


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