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How to solve for Bad Debt as an Analysis of Receivables Method

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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:

  1. Calculate the Allowance for Doubtful Accounts (ADA) by multiplying the total accounts receivable by the estimated percentage of uncollectible accounts.
  2. Subtract the ADA from the total accounts receivable to get the Net Realizable Value (NRV).
  3. Identify any specific accounts that are deemed uncollectible and write them off as bad debt.
  4. 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.

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