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 $910,000; Allowance for Doubtful Accounts has a credit balance of $8,000; and sales for the year total $4,100,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $38,400.

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.
$

Accounts Receivable $ Allowance for Doubtful Accounts $ Bad Debt Expense $

Explanation / Answer

a.

Amount of the adjusting entry for uncollectible accounts = Ending allowance for doubtful accounts - Beginning allowance for doubtful accounts

= 38,400 - 8,000

= 30,400

b.

c.

Net realizable value of accounts receivable = Accounts receivable - Allowance for doubtful accounts

= 910,000 - 38,400

= 871,600

Accounts Receivable 910,000 Allowance for Doubtful Accounts 38,400 Bad Debt Expense 30,400

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