At December 31, 2010. Accounts Receivable has a balance of $850,000; Allowance f

Question

At December 31, 2010. Accounts Receivable has a balance of $850,000; Allowance for Doubtful Accounts has a credit balance of $2.750; and net sales for the car total $4,000,000. Bad debt expense is estimated at 1/2 of 1% of net sales. Using the Analysis of Receivables method for estimating uncollectible accounts, determine the following: the amount of the adjusting entry for uncollectible accounts: prepare the adjusting journal entry to record the uncollectible amounts: the adjusted balances of: Accounts Receivable Allowance of Doubtful Accounts Bad Debt Expense the net realizable value of accounts receivable:

Explanation / Answer

Answer:2

(a) Amount of Adjusting entry=12920-2750=10170

(b) Dr Bad Debt Expense 10170
Cr Allowance for Doubtful Accounts 10170

(c)

(1) Accounts receivable=850000

(2)Allowance for Doubtful Accounts=12920

(3) Bad debts expense==10170

Answer:(d) Net realizable balance of Accounts receivable=850000-12920=837080

Est uncollectible Accts Age interval: Balance: % Amount Current 775000 1% 7750 1-30 days past due 27500 2% 550 31-60 days past due 21500 5% 1075 61-90 days past due 15250 8% 1220 91-180 days past due 8500 12% 1020 181-365 days past due 1800 50% 900 over 365 days past due 450 90% 405 Total 850000 12920

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