Question

help asap please!!

At the end of the current year, Accounts Receivable has a balance of $181,450 Allowance for Doubtful Accounts has a debit balance of $3,835 and sales for the year total $1,157,000. Bad debt expense is estimated at 1% of sales. a. Determine the amount of the adjusting entry for bad debt expense. b. Determine the adjusted balances of Accounts Recelvable, Allowance for Doubtful Accounts, and Bad Debt Expense. Adjusted Balance Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Submit Test for Grading

Answer 1

a. The amount of the adjusting entry for bad debt expense   [Refer working note 1]	$11,570
b. Adjusted balances:
Accounts receivable	$181,450
Allowance for Doubtful Accounts                         [Refer working note 2]	$7,735
Bad debt expense	$11,570
c. The net realizable value of accounts receivable    [Refer working note 3]	$173,715

Working note 1 - Computation of bad debt expense
a. Sales	$1,157,000
b. % of sales estimated as bad debt expense	1%
Amount of bad debt expense   [a x b]	$11,570

Working note 2 - Calculation of adjusted balance of allowance for doubtful accounts
Balance in the allowance for doubtful accounts before the adjusting entry for bad debt expense	-$3,835
Add: Bad debt expense         [Refer working note 1]	$11,570
Adjusted balance of allowance for doubtful accounts	$7,735

Working note 3 - Calculation of net realizable value
Adjusted balance of accounts receivable	$181,450
Less: Adjusted balance of allowance for doubtful accounts         [Refer working note 2]	$7,735
Net realizable value	$173,715