Question

At the end of the current year, Accounts Receivable has a balance of $948,990 Allowance for Doubtful Accounts has a credit balance of $7,026 and net sales for the year total $2,006,000. Bad debt expense is estimated at 1/2 of 1% of net sales.

a. Determine the amount of the adjusting entry for bad debt expense.
$_________

b. Determine the adjusted balances of Accounts Receivable, 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.
$__________

Answer 1

a)

Net sales	$ 2,006,000
Estimated baddebt % of net sales	0.50%
Baddebt expense ($2,006,000*0.50%)	$        10,030

b)

Accounts receivable	$ 948,990
Allowance for doubtful account ($7,026+$10,030)	$    17,056
Baddebt expense	$    10,030

c)

Accounts receivable	$ 948,990
Less: Allowance for doubtful account ($7,026+$10,030)	$    17,056
net realizable value of accounts receivable	$ 931,934

You can reach me over comment box if you have any doubts. Please rate this answer