Final answer:
To solve for Bad Debt using the Analysis of Receivables Method, follow the steps: calculate the ADA, subtract ADA from total accounts receivable to get NRV, write off specific uncollectible accounts, and adjust ADA.
Step-by-step explanation:
To solve for Bad Debt using the Analysis of Receivables Method, you need to follow these steps:
- Calculate the Allowance for Doubtful Accounts (ADA) by multiplying the total accounts receivable by the estimated percentage of uncollectible accounts.
- Subtract the ADA from the total accounts receivable to get the Net Realizable Value (NRV).
- Identify any specific accounts that are deemed uncollectible and write them off as bad debt.
- Adjust the ADA to reflect any changes in the estimated percentage of uncollectible accounts.
You will be able to accurately determine the Bad Debt using the Analysis of Receivables Method.