Question

Presented below are a series of unrelated situations. Answer the questions relating to each of the five independent situations as requested. 1. Sunland Company's unadjusted trial balance at December 31, 2025, included the following accounts: Sunland Company estimates its bad debt expense to be 6% of gross accounts receivable. Determine its bad debt expense for 20 Bad debt expense for 2025$ 2. An analysis and aging of Coronado Corp. accounts receivable at December 31,2025 , disclosed the following: What is the net realizable value of Coronado's receivables at December 31,2025 ? Net realizable value $ Whispering Co. provides for doubtful accounts based on 4% of gross accounts receivable. The following data are available for 21 What is the balance in Allowance for Doubtful Accounts at December 31, 2025? Allowance for doubtful accounts $ 4. At the end of its first year of operations, December 31, 2025, Metlock Inc, reported the following information: What should be the balance in accounts receivable at December 31, 2025, before subtracting the allowance for doubtful accoul What should be the balance in accounts receivable at December 31,2025 , before subtracting the allowance for doubtful accoui Accounts receivable, before subtracting allowance for doubtful accounts The following accounts were taken from Bonita Incis trial balance at December 31, 2025: If doubtful accounts are 5% of accounts receivable, determine the bad debt expense to be reported for 2025.

Answer 1

Five different situations related to bad debt expense and net realizable value.

1. Sunland Company

Step 1: Given data - Estimated bad debt percentage = 6% - Gross accounts receivable = $825,000

Step 2: Calculation - Bad debt expense = Estimated bad debt percentage * Gross accounts receivable - Bad debt expense = 6% * $825,000 = $49,500

Step 3: Conclusion - Sunland Company's bad debt expense for 2025 is $49,500.

2. Coronado Corp.

Step 1: Given data - Estimated uncollectible accounts percentage = 10% - Gross accounts receivable = $45,000

Step 2: Calculation - Estimated uncollectible accounts = Estimated uncollectible accounts percentage * Gross accounts receivable - Estimated uncollectible accounts = 10% * $45,000 = $4,500 - Net realizable value = Gross accounts receivable - Estimated uncollectible accounts - Net realizable value = $45,000 - $4,500 = $40,500

Step 3: Conclusion - The net realizable value of Coronado's receivables at December 31, 2025, is $40,500.

3. Whispering Co.

Step 1: Given data - Estimated bad debt percentage = 4% - Gross accounts receivable = $950,000 - Beginning balance in Allowance for Doubtful Accounts = $2,000

Step 2: Calculation - Allowance for Doubtful Accounts = Estimated bad debt percentage * Gross accounts receivable - Allowance for Doubtful Accounts = 4% * $950,000 = $38,000 - Bad debt expense = Ending balance in Allowance for Doubtful Accounts - Beginning balance in Allowance for Doubtful Accounts - Bad debt expense = $38,000 - $2,000 = $36,000

Step 3: Conclusion - The balance in Allowance for Doubtful Accounts at December 31, 2025, is $38,000, and the bad debt expense for 2025 is $36,000.

4. Metlock Inc.

Step 1: Given data - Net credit sales = $475,000 - Bad debt expense = $22,000

Step 2: Calculation - Accounts receivable, before subtracting allowance for doubtful accounts = Net credit sales + Bad debt expense - Accounts receivable, before subtracting allowance for doubtful accounts = $475,000 + $22,000 = $497,000

Step 3: Conclusion - The balance in accounts receivable at December 31, 2025, before subtracting the allowance for doubtful accounts, is $497,000.

5. Bonita Inc.

Step 1: Given data - Estimated bad debt percentage = 5% - Gross accounts receivable = $375,000

Step 2: Calculation - Bad debt expense = Estimated bad debt percentage * Gross accounts receivable - Bad debt expense = 5% * $375,000 = $18,750

Step 3: Conclusion - Bonita Inc.'s bad debt expense for 2025 is $18,750.

Answer 2

1. Sunland Company

Bad debt expense for 2025 is estimated to be 6% of gross accounts receivable. Therefore, to determine the bad debt expense for 2025, we need to multiply the estimated bad debt percentage by the gross accounts receivable balance.

Bad debt expense = Estimated bad debt percentage * Gross accounts receivable

Bad debt expense = 6% * $825,000 = $49,500

Therefore, Sunland Company's bad debt expense for 2025 is $49,500.

2. Coronado Corp.

To determine the net realizable value of Coronado's receivables at December 31, 2025, we need to subtract the estimated uncollectible accounts from the gross accounts receivable balance.

Estimated uncollectible accounts = 10% * $45,000 = $4,500

Net realizable value = Gross accounts receivable - Estimated uncollectible accounts

Net realizable value = $45,000 - $4,500 = $40,500

Therefore, the net realizable value of Coronado's receivables at December 31, 2025, is $40,500.

3. Whispering Co.

Whispering Co. provides for doubtful accounts based on 4% of gross accounts receivable. Therefore, to determine the balance in Allowance for Doubtful Accounts at December 31, 2025, we need to multiply the estimated bad debt percentage by the gross accounts receivable balance at the end of the year.

Allowance for Doubtful Accounts = Estimated bad debt percentage * Gross accounts receivable

Allowance for Doubtful Accounts = 4% * $950,000 = $38,000

Since the company started the year with a balance of $2,000 in Allowance for Doubtful Accounts, the bad debt expense for 2025 would be:

Bad debt expense = Ending balance in Allowance for Doubtful Accounts - Beginning balance in Allowance for Doubtful Accounts

Bad debt expense = $38,000 - $2,000 = $36,000

Therefore, the balance in Allowance for Doubtful Accounts at December 31, 2025, is $38,000, and the bad debt expense for 2025 is $36,000.

4. Metlock Inc.

To determine the balance in accounts receivable at December 31, 2025, before subtracting the allowance for doubtful accounts, we need to add back the bad debt expense to the net credit sales for the year.

Accounts receivable, before subtracting allowance for doubtful accounts = Net credit sales + Bad debt expense

Accounts receivable, before subtracting allowance for doubtful accounts = $475,000 + $22,000

Accounts receivable, before subtracting allowance for doubtful accounts = $497,000

Therefore, the balance in accounts receivable at December 31, 2025, before subtracting the allowance for doubtful accounts, is $497,000.

5. Bonita Inc.

If doubtful accounts are 5% of accounts receivable, to determine the bad debt expense to be reported for 2025, we need to multiply the estimated bad debt percentage by the gross accounts receivable balance at the end of the year.

Bad debt expense = Estimated bad debt percentage * Gross accounts receivable

Bad debt expense = 5% * $375,000 = $18,750

Therefore, Bonita Inc.'s bad debt expense for 2025 is $18,750.