onnvokel-assignments&takeAssignmentSessionLocator..; B: Percent of Sales Method

Question

onnvokel-assignments&takeAssignmentSessionLocator..; B: Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $900,000; Allowance for Doubtful Accounts has a debit balance of $8,000; and sales for the year total $4,050,000. Bad debt expense is estimated at l/4 of 1% of sales. 1. Determine the amount of the adjusting entry for uncollectible accounts. 101,250,x 2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. 900,000 ,020,50) x 101,250, X Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense 3. Determine the net realizable value of accounts receivable. 8,000 X Feedbacik Check My Work a. Remember that since accounts receivable are created by credit sales, uncollectible accounts can be estimated as a percent of credit sales. If the portion of credit sales to sales is relatively constant, the percent may be applied to total sales b. Under the percent of sales method, the amount of the adjustment is the amount estimated for Bad Debt Expense c. Remember that net realizable value is the amount that is expected to be collected or realized Learning Objective 4 Next Check My Work 1 more Check My Work uses remaining

Explanation / Answer

1) Adjusting entry for uncollectible accounts 4,050,000*1%*1/4 10125 2) Adjusted balances Accounts receivable 900,000 Allowance for Doubtful accounts 2125 Bad debts expense 10,125 3) Net Realizable value of accounts receivable 897875

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