Accounts Receivable Sheet 120x220x1 Sales

Sheet120x220x1sales239870008423000accounts Receivable 1231124

Estimate the amount of Uncollectible Accounts as of December 31, 20X2, and calculate the company's Uncollectible Accounts expense for 20X2. Additionally, compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2, expressing these as percentages of respective year-end receivables balances. Examine the adjustments necessary for Mary’s Day Care Center’s financial records as of December 31, 20X3, including recording supplies used, unrecorded interest, unearned tuition revenue, depreciation, prepaid rent, accrued salaries, and expired insurance premiums.

Paper For Above instruction

The analysis begins with estimating the uncollectible accounts as of December 31, 20X2, based on the aging schedule and percentages provided. The accounts receivable balance at the year-end was $12,444,056,000, with an allowance for uncollectible accounts calculated at $1,612,010. The aging schedule categorizes receivables into under 31 days, 31-60 days, 61-90 days, and over 90 days, with uncollectible percentages increasing with age. Using the provided data, the total estimated uncollectible accounts amount to $1,612,010.

The company's uncollectible accounts expense for 20X2 is derived by adjusting for write-offs made during the year. Since $23,000 was written off in 20X1, this amount is deducted from the allowance before recognizing the year's expense. The calculation involves adding the estimated uncollectibles for 20X2 to the beginning allowance and subtracting actual write-offs, aligning with standard accounting practices for estimating bad debt expense.

The net realizable value (NRV) of accounts receivable signifies the amount expected to be collected and is calculated by subtracting the allowance for uncollectible accounts from the total accounts receivable. For 20X1, the NRV was computed as $10,831,033,000, which is 87% of the year-end receivables. For 20X2, the NRV was recalculated based on updated balances, reflecting an improvement or decline in receivables quality over the year.

Moving to Mary’s Day Care’s accounting cycle, various adjusting entries are necessary to accurately reflect the financial position as of December 31, 20X3. For supplies, beginning inventory was $1,350. An additional $5,520 worth of supplies was purchased during the year, and the unused balance on December 31 was $1,620. The supplies used are calculated as the sum of beginning supplies and purchases, minus ending supplies, resulting in $5,250 worth of supplies used. This amount must be recorded as supplies expense, with a corresponding decrease in supplies asset account.

Unrecorded interest owed to the center totals $275, which necessitates recognizing accrued interest revenue. Since interest revenue was not initially recorded, an adjusting journal entry will debit Interest Receivable and credit Interest Revenue for $275.

Regarding tuition receipts, payments received in advance are credited to Unearned Tuition Revenue. On August 31, $65,500 was credited, with the exception of $15,500 allocated to a future period, leaving $50,000 attributable to the current period. Adjustments involve reducing unearned revenue and recognizing actual tuition revenue earned in the period, with a proportional portion of the unearned amount recognized.

The depreciation on the school’s van for the year is $3,000, which must be recorded as depreciation expense. The corresponding accumulated depreciation account increases by the same amount to reflect the van’s usage during the period.

Rent paid in advance for six months, starting August 1, was $24,000, paid through a check and initially recorded as Prepaid Rent. As of December 31, four months of rent expense has been incurred (August to December), totaling $20,000. The appropriate journal entry involves debiting Rent Expense for $20,000 and crediting Prepaid Rent for the same amount to recognize the rent used up during the period.

Salaries earned by employees need to be accrued. Two salaried employees each earn $400 weekly, paid every Friday. Since December 31 falls on a Thursday, four days’ worth of salaries per employee — totaling $80 per day — must be accrued, leading to a total accrued salaries expense of $640 for both employees. The journal entry will debit Salaries Expense and credit Salaries Payable.

Finally, insurance premiums paid in advance involve multiple policies with different coverage durations. For each, the portion of the premium expired during the period must be calculated and recorded as insurance expense, with the remaining balance retained as Prepaid Insurance. The calculations involve prorating the premiums based on the length of coverage, and the total expired amount is $1,582, which should be debited to Insurance Expense and credited to Prepaid Insurance accordingly.

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