Question

At the end of the current year, Accounts Receivable has a balance of $826,550; Allowance for Doubtful Accounts has a credit balance of $6,024; and sales for the year total $3,714,000. 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

	Adjusting entry
	Account titles & Explanations					Debit	Credit
	Bad debts expense					18570
	Allowance for Doubtful accounts						18,570
	(3,714,000*1/2*1%)
	Adjusted balances					Adjusted Balance
	Accounts receivable					826,550
	Allowance for doubtful accounts					24594
	Bad debts expense					18570
	Net realizable value		(826550-24594)			801,956