Question

Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $2,150,000; Allowance for Doubtful Accounts has a debit balance of $10,500; and sales for the year total $51,850,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $110,000 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.

Answer 1

a. Answer:$120,500

Calculation:

Allowance for doubtful account, Ending balance [Cr. Bal.]	$110,000
Add: Allowance for doubtful account, Beginning balance [Dr. Bal.]	$10,500
Amount for the adjusting entry	$120,500

b.Answer:

Accounts receivable [$2,150,000 Beg. Bal. + $1,850,000 Cr. Sales]	$54,000,000
Allowance for doubtful accounts	$110,000
Bad debt expense	$120,500

C.Answer:$53,890,000

Calculations:

Accounts receivable	$54,000,000
(Less):Allowance for doubt ful accounts	($110,000)
Net realizable value	$53,890,000