Question

At the end of the current year, Accounts Receivable has a balance of $5,125,000; Allowance for Doubtful Accounts has a debit balance of $32,600; and sales for the year total $105,550,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $225,000.
a. Determine the amount of the adjusting entry for uncollectible accounts.
fill in the blank 1 of 1$
b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
Line Item Description Amount
Accounts Receivable $fill in the blank 2
Allowance for Doubtful Accounts $fill in the blank 3
Bad Debt Expense $fill in the blank 4
c. Determine the net realizable value of accounts receivable.
fill in the blank 1 of 1$

Answer 1

Answer:

a. To determine the amount of the adjusting entry for uncollectible accounts, we calculate the necessary adjustment by subtracting the current balance of Allowance for Doubtful Accounts from the estimated balance.

Estimated balance for Allowance for Doubtful Accounts: $225,000

Current balance of Allowance for Doubtful Accounts: $32,600

Adjusting entry for uncollectible accounts:

$225,000 - $32,600 = $192,400

b. Adjusted balances:

Accounts Receivable: $5,125,000

Allowance for Doubtful Accounts: $225,000

Bad Debt Expense: $192,400

c. Net realizable value of accounts receivable is calculated by subtracting the Allowance for Doubtful Accounts from the Accounts Receivable balance.

Net realizable value of accounts receivable:

$5,125,000 - $225,000 = $4,900,000

Step-by-step explanation: