Question

Percent of Sales Method

At the end of the current year, Accounts Receivable has a balance of $750,000; Allowance for Doubtful Accounts has a credit balance of $6,500; and sales for the year total $3,380,000. Bad debt expense is estimated at 1.1% 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.
$

Answer 1

Ans.1	Uncollectible accout's amount   =   Sales * 1.1%
			3380000 * 1.1%
			37180
Ans.2	Accounts receivables (balance) = 750000
	Allowance for Doubtful Accounts         = 43680
	Bad debts expenses = 37180
	*Allowance for Doubtful Accounts = Credit balance + Uncollectible amount
			6500 + 37180
			43680
	*Bad debts expenses = Uncollectible amount = 37180
Ans.3	Net Realizable value = Accounts receivables - Allowance for doubtful debts
			750000 - 43680
			706320