1.

At the end of 2020, Novak Corp. has accounts receivable of $2.85 million and an allowance for doubtful accounts of $125,000. On January 16, 2021, Novak determined that its $19,100 receivable from Wildhorse Co. will not be collected, and management has authorized its write off. On January 31, 2021, Novak received notification that the company will be receiving $0.15 for every $1.00 of accounts receivable relating to Sandhill Co. The company had previously written off 100% of the amount due from Sandhill ($54,000).

Prepare the journal entry for Novak Corp. to write off the Wildhorse receivable and any journal entry necessary to reflect the notice regarding Sandhill Co. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) To write off the Wildhorse accounts:

Account Titles and Explanation	Debit	Credit

Sandhill Co. reinstatement of partial accounts receivable for amounts previously written off and now determined to be collectible:

Account Titles and Explanation	Debit	Credit

eTextbook and Media

List of Accounts

What is the estimated net realizable value of Novaks accounts receivable before and after the entries above? What is the book value of Novaks accounts receivable before and after the entries above?

		Before Adjustments		After Adjustments
Net Realizable Value		$		$
Book Value		$		$

2.

The trial balance before adjustment of Sage Hill Inc. shows the following balances:

		Dr.		Cr.
Accounts receivable		$103,100
Allowance for doubtful accounts		2,000
Sales revenue (all on credit)				$696,000
Sales returns and allowances		30,400

Give the entry for bad debt expense for the current year assuming the allowance should be 5% of gross accounts receivable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Give the entry for bad debt expense for the current year assuming historical records show that, based on accounts receivable aging, the following percentages will not be collected: (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

		Balance		Percentage Estimated to Be Uncollectible
030 days outstanding		$35,700		1%
3160 days outstanding		45,600		5%
6190 days outstanding		12,900		12%
Over 90 days outstanding		8,900		18%

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Give the entry for bad debt expense for the current year assuming allowance for doubtful accounts is $2,000 but it is a credit balance and the allowance should be 5% of gross accounts receivable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Give the entry for bad debt expense for the current year assuming allowance for doubtful accounts is $2,000 but it is a credit balance and historical records show that the following percentages will not be collected: (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

		Balance		Percentage Estimated to Be Uncollectible
030 days outstanding		$35,700		1%
3160 days outstanding		45,600		5%
6190 days outstanding		12,900		12%
Over 90 days outstanding		8,900		18%

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount