Lewis Warehouse used the allowance method to record the fo
Question and Solution
Lewis Warehouse used the allowance method to record the following transactions, adjusting entries, and closing entries during the year ended December 31, 20--: Feb. 7 Received 70% of the $8,000 balance owed by Luxury Sofas, a bankrupt business, and wrote off the remainder as uncollectible. May 26 Reinstated the account of Sandy Johnson, which had been written off in the preceding year, and received $3,725 cash in full settlement. Aug. 15 Wrote off the $9,350 balance owed by Izumi Goto as uncollectible. Oct. 6 Reinstated the account of Doreen Woods, which had been written off in the preceding year, and received $4,320 cash in full settlement. Dec. 29 Wrote off the following accounts as uncollectible, in compound entry form: Schmidt & Yeager, $13,945; Economy Homes, $15,830; Davis Industries, $11,865. 31 Based on an aging analysis of the $1,175,000 of accounts receivable, it was estimated that $67,150 will be uncollectible. Made the adjusting entry. 31 Made the entry to close the appropriate account to Income Summary. Selected accounts and beginning balances on January 1, 20--, are as follows: 122.1 Allowance for Bad Debts $49,850 credit 313 Income Summary –– 532 Bad Debt Expense –– REQUIRED 1. Open the three selected accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal. After each entry, post to the three accounts named. 3. Determine the net realizable value as of December 31, 20--.