202k views
0 votes
Percent of sales method 9.3B

Accounts receivable = $3,460,000
Allowance for doubtful accounts = $12,500 debit balance
Sales = $46,300,000
Bad debt = 1/2 of 1%
What is the adjusting entry for uncollectible accounts?
Adjusted Balance for allowance for doubtful accounts?
Balance Sheet presentation of net realizable value?

User Arsenm
by
8.2k points

1 Answer

3 votes

Final answer:

The adjusting entry for uncollectible accounts is $231,500. The adjusted balance for the allowance for doubtful accounts is $244,000 debit balance. The balance sheet presentation of net realizable value is $3,216,000.

Step-by-step explanation:

The adjusting entry for uncollectible accounts can be calculated using the percent of sales method. To calculate the bad debt expense, you need to multiply the sales by the percentage of bad debt. In this case, the bad debt is 1/2 of 1%, so the bad debt expense would be:

= $46,300,000 * 0.5%

= $231,500.

The adjusted balance for the allowance for doubtful accounts can be calculated by adding the bad debt expense to the existing debit balance. In this case, the adjustment would be:

= $12,500 + $231,500

= $244,000 debit balance.

The balance sheet presentation of net realizable value would be the difference between the total accounts receivable and the allowance for doubtful accounts. In this case, it would be:

=$3,460,000 - $244,000

= $3,216,000.

User DRobinson
by
8.0k points