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 $3,460,000; Allowance for Doubtful Accounts has a debit balance of $12,500; and sales for the year total $46,300,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $245,000.

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.

c. Determine the net realizable value of accounts receivable.
$

Explanation / Answer

Accounts Receivables Account Debit Credit Credit Sales 46300000 Collections(plug-in Fig.) 42840000 Closing Balance 3460000 Allowance for doubtfual account Debit Credit Current Balance 12500 Bad debt expense for the year(Plug-in fig. 257500 Cl.balance 245000 a. Amount of the adjusting entry for uncollectible accounts = 257500 and the entry will be Bad Debt Expense 257500 All. For D/Debts 257500 b. Balances after adj. Accounts Receivable 3460000 Allowance for Doubtful Accounts 245000 Bad Debt Expense 257500 c. Net realizable value of accounts receivable= 3460000-245000= 3215000

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