Question

Analysis of Receivables method 9.4B

Accounts receivable = $3,460,000
Allowance for doubtful accounts = $12,500 debit balance
Sales = $46,300,000
Using the aging method the balance of Allowance for Doubtful Accounts = $245,000
What is the adjusting entry for uncollectible accounts?
Adjusted Balance for allowance for doubtful accounts?
Balance Sheet presentation of net realizable value?

Answer 1

The adjusting entry for uncollectible accounts involves increasing the Allowance for Doubtful Accounts. The adjusted balance for the Allowance for Doubtful Accounts is $245,000. The net realizable value on the balance sheet is $3,215,000.

Step-by-step explanation:

The adjusting entry for uncollectible accounts is to increase the Allowance for Doubtful Accounts by the difference between the desired balance and the current balance. In this case, the desired balance is $245,000 and the current balance is $12,500, resulting in an adjustment of $232,500.

The adjusted balance for the Allowance for Doubtful Accounts will be $245,000. This represents the estimated amount of accounts receivable that may not be collected.

The net realizable value on the balance sheet is calculated by subtracting the adjusted balance of the Allowance for Doubtful Accounts from the Accounts Receivable. In this case, the net realizable value would be $3,460,000 - $245,000 = $3,215,000.