12/31/2020: During 2020, $10,000 in accounts receivable were written off. At the end of the second year of operations, Yolandi Company had $1,000,000 in sales and accounts receivable of $400,000. XYZ's management has estimated that $17,000 in accounts receivable would be uncollectible.
For the end of 2020, after the adjusting entry for bad debts was journalized, what is the balance in the following accounts:
Bad debt expense: Allowance for doubtful accounts:
For the end of 2020, what is the company's net realizable value?
Answer:
Bad debt expense = $17000
Allowance for doubtful accounts = $17000
Company's net realizable value of accounts receivable at end of 2020 is
= $383,000
Explanation:
From the information given :
Accounts written off in 2020 = $10,000
Accounts receivable expected to be uncollectible = $17,000
The Bad debt expense and Allowance for doubtful accounts can be computed as follows:
12/31/2020
Adjustment entry :
Debit Credit
Bad debt expense $17000
Allowance for doubtful accounts $17000
Company's net realizable value of accounts receivable at end of 2020 = Closing accounts receivables - Allowance for Doubtful accounts =
Company's net realizable value of accounts receivable at end of 2020 is:
= $400,000 - $17,000
= $383,000