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--.