v2.cengagenow.conm 0. Calculator Percent of Sales Method At the end of the curre

Question

v2.cengagenow.conm 0. Calculator Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $895,000; Allowance for Doubtful Accounts has a credit balance of $8,000; and sales for the year total $4,030,000. Bad debt expense is estimated at l/4 of 1% of sales. 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

Bad debt expense = 4030000 * 1/4 * 1% = 10075

Amount of adjusting entry for uncollectible accounts is Bad Debt expense Debit (10075) and allowance for doubtful account (credit) 10075

Accounts receivable = 895000

Allowance for diubtful account = 8000 + 10075 = 18075

Bad Debt expense = 10075

Net realizable value of receivables = 895000 - 18075 = 876925

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