Question

At the end of the current year, Accounts Receivable has a balance of $1,975,000; Allowance for Doubtful Accounts has a credit balance of $19,670; and sales for the year total $28,550,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $225,000.

a. Determine the amount of the adjusting entry for uncollectible accounts.
b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
Accounts Receivable ____________ $
Allowance for Doubtful Accounts ________ $
Bad Debt Expense _______ $
c. Determine the net realizable value of accounts receivable.

Answer 1

Answer and Explanation:

a. The amount of the adjusting entry for uncollectible accounts is

= $225,000 - $19,670

= $205,330

b. the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense is

For account receivable it is $1,975,000

For allowance for doubtful debts, it is $225,000

And, for bad debt expense, it is $205,330

c. The net realizable value of accounts receivable is

= $1,975,000 - $225,000

= $1,750,000