On June 30, Paisley Party Planners had a $35,000 balance in Accounts Receivable and a $3.252 credit balance in Allowance for Uncollectible Accounts. During July, Paisley made credit sales of $198,000. July collections on account were $169,000, and write-offs of uncollectible receivables totaled $2,890. Uncollectible-accounts expense is estimated as 4% of credit sales. No sales returns are expected.
Requirements:
1. Journalize sales, collections, write-offs of uncollectibles, and uncollectible-account expense by the allowance method during July. Explanations are not required.
2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts, and Net Accounts Receivable at July 31. How much does Paisley expect to collect?

Explanation:

1. The journal entries are as follows

Account receivable Dr $198,000

           To Sales revenue  $198,000

Cash Dr $169,000

      To Account receivable  $169,000

Allowance  for Uncollectible Accounts Dr $2,890

           To Account receivable A/c $2,890

Bad debt expense Dr $7,920

       To Allowance  for Uncollectible Accounts $7,920

It is computed below:

= Credit sales × estimated percentage

= 4% × $198,000

= $7,920

2. The ending balance are as follows

For Account receivable

= Beginning balance + credit sales - cash collections - written off amount

= $35,000 + $198,000 - $169,000 - $2,890

= $61,110

For Allowance for uncollectible accounts

= Opening balance + bad debts - written off amount

= $3,252 + $7,920 - $2,890

= $8,282

Now the net account receivable balance

= Account receivable - Allowance for uncollectible accounts

= $61,110 - $8,282

= $52,828

So, the expected collection is $52,828

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explanation: