Question

Percent of Sales Method At the end of the current year, Accounts Receivable has a balance...

Percent of Sales Method

At the end of the current year, Accounts Receivable has a balance of $595,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,680,000. Bad debt expense is estimated at 1/4 of 1% of sales.

1. Determine the amount of the adjusting entry for uncollectible accounts.
$

2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.

Accounts Receivable $
Allowance for Doubtful Accounts $
Bad Debt Expense $


3. Determine the net realizable value of accounts receivable.
$

Homework Answers

Answer #1
1) Adjusting Entry
Account titles & explanations Debit Credit
Bad debts expense 6700
Allowance for Doubtful accounts 6,700
(2,680,000*1%*1/4)
2) Account receivable 595,000
Allowance for Doubtful accounts 12,200
Bad Debts expense 6,700
3) Net realizable value of accounts receivable
Accounts receivable 595,000
less allowance for doubtful accounts -12,200
net realizable value of accounts receivable 582,800
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