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Question

Learning G At the end of the current ye + akeAssignmentMain.do?inprogress true Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $755,000; Allowance for Doubtful Accounts has a debit balance of $7,00o; and sales for the year total $3,400,000. Bad debt expense is estimated at 1/2 of 1% of sales. 1. Determine the amount of the adjusting entry for uncollectible accounts. 2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense 3. Determine the net realizable value of accounts receivable. Previous Next

Explanation / Answer

Answer 1.

Adjusting entry for uncollectible accounts = Sales * 1/2 * 1%
Adjusting entry for uncollectible accounts = $3,400,000 * 1/2 * 1%
Adjusting entry for uncollectible accounts = $17,000

Answer 2.

Accounts Receivable = $755,000

Allowance for Doubtful Accounts = -$7,000 + $17,000
Allowance for Doubtful Accounts = $10,000

Bad Debt Expense = $17,000

Answer 3.

Net Realizable Value = Accounts Receivable - Allowance for Doubtful Accounts
Net Realizable Value = $755,000 - $10,000
Net Realizable Value = $745,000

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