Question

Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $670,000, Allowance for Doubtful Accounts has a debit balance of $6,000, and sales for the year total $3,020,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $21,000. 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. $27,000

b. $670,000

$21,000

$27,000

c.$649,000

Step-by-step explanation:

a. Calculation to determine the amount of the adjusting entry for uncollectible accounts

Using this formula

Adjusting entry for Uncollectible accounts = Allowance for Doubtful Accounts - Debit balance on Allowance for doubtful accounts

Let plug in the formula

Adjusting entry for Uncollectible accounts= $21,000 + $6,000

Adjusting entry for Uncollectible accounts= $27,000

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

Accounts Receivable = $670,000

Allowance for Doubtful Accounts = $21,000

Bad Debt Expense =$21,000 + $6,000

Bad Debt Expense= $27,000

c. Calculation to determine the net realizable value of accounts receivable

Using this formula

Net realizable value of accounts receivable = Accounts receivables - Allowance for Doubtful Accounts

Let plug in the formula

Net realizable value of accounts receivable= $670,000 - $21,000

Net realizable value of accounts receivable= $649,000

Therefore the net realizable value of accounts receivable is $649,000