Question

At the end of the current year, Accounts Receivable has a balance of $950,000; Allowance for Doubtful Accounts has a credit balance of $8,500; and sales for the year total $4,280,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $40,000. a. Determine the amount of the adjusting entry for uncollectible accounts. $fill in the blank 1 b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $fill in the blank 2 Allowance for Doubtful Accounts $fill in the blank 3 Bad Debt Expense $fill in the blank 4 c. Determine the net realizable value of accounts receivable. $fill in the blank 5

Answer 1

a. Adjusting entry for Uncollectible accounts = Allowance for Doubtful Accounts - Credit balance on Allowance for doubtful accounts

= 40,000 - 8,500

= $31,500

b. Accounts Receivable = $950,000

Allowance for Doubtful Accounts = $40,000

Bad Debt Expense = This is the adjusting entry for Uncollectible accounts = $31,500

c. Net realizable value of accounts receivable = Accounts receivables - Bad debt

= 950,000 - 31,500

= $918,500