Question 9.4: Analysis of Receivables Method At the end of the current yea......
Analysis of Receivables Method
At the end of the current year, Accounts Receivable has a balance of $800,000; Allowance for Doubtful Accounts has a credit balance of $7,500; and net sales for the year total $3,500,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $30,000. Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable
a. $22,500 ($30,000 – $7,500) \underline{Adjusted Balance}
b. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $800,000
Allowance for Doubtful Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,500
c. $770,000 ($800,000 – $30,000)