Question

Oriole Company uses the percentage-of-receivables basis to record bad debt expense. Accounts receivable (ending balance) $510,000...

Oriole Company uses the percentage-of-receivables basis to record bad debt expense.

Accounts receivable (ending balance) $510,000 (debit)
Allowance for doubtful accounts (unadjusted) 5,400 (debit)


The company estimates that 2% of accounts receivable will become uncollectible.

(a)

Prepare the adjusting journal entry to record bad debt expense for the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit


(b)

What is the ending (adjusted) balance in Allowance for Doubtful Accounts?

Ending (adjusted) balance in Allowance for Doubtful Accounts $


(c)

What is the cash (net) realizable value?

Cash (net) realizable value $
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Homework Answers

Answer #1

Requirement a

General Journal Debit   Credit
Bad debts expense $        15,600.00
        Allowance for doubtful accounts $ 15,600.00
(To record bad debts expense)

Requirement b

Ending (adjusted) balance in Allowance for Doubtful Accounts = $10,200 Credit

Requirement c

Cash (net) realizable value= $499,800

Working

Estimated balance of allowance for uncollectables $ 10,200.00 Cr
Balance in Allowance for uncollectable account (Dr) $    5,400.00 Dr
Total bad debts to be recorded $ 15,600.00 Cr

.

Accounts receivable $ 510,000.00
Less: Allowance for doubtful accounts $    10,200.00
Cash (net) realizable value $ 499,800.00
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