Analysis of Receivables Method At the end of the current year, Accounts Receivab

Question

Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $940,000; Allowance for Doubtful Accounts has a debit balance of $8,500; and sales for the year total $4,230,000. 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 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

Explanation / Answer

a) Amount of adjusting entry for uncollectible amounts = 40000+8500 = $48500

b) Adjusted amount :

Account receivable = 940000

Allowance for doubtful accounts = $40000

Bad debt expense = $48500

c) Net realizable value = 940000-40000 = $900000

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