Determine bad debts expense using the percentage of sales method. Following are

Question

Determine bad debts expense using the percentage of sales method. Following are the 2010 year-end balances before adjustments;
• Accounts receivable (AR) $80,000
• Allowance for uncollectible accounts $ (2,000)
• Net sales $250,000
Using the percentage of sales method, the company estimates 3% of sales will become uncollectible. What is the bad debts expense for 2010? What will be the net realizable value of accounts receivable on the year-end balance sheet?

show work

Explanation / Answer

Accounts receivable (AR) $80,000 Allowance for uncollectible accounts $ (2,000) Net sales $250,000 3% of sales incollectible ==> 3% of 250,000 = 7500 Uncollectible Accounts Expense = $7500 percentage of sales method bad debts expense for 2010 = Uncollectible Accounts Expense - Allowance for uncollectible accounts = 7500 - 2000 = 5500 bad debts expense for 2010 = $5500 net realizable value of accounts receivable = Accounts receivable - bad debts expense = 80000 - 5500 = 74500 net realizable value of accounts receivable = $74500

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.