Analysis of Receivables Method At the end of the current year, Accounts Receivab

Question

Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $485,000; Allowance for Doubtful Accounts has a credit balance of $4,500; and sales for the year total $2,180,000, using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $23,900 a. Determine the amount of the adjusting entry for uncollectible accounts. 28,400 | X b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable 485,000 Allowance for Doubtful Accounts 23,900v Bad Debt Expense c. Determine the net realilzable value of accounts receivable 28,400 | X 461,100 e analysis of receivables method is based on the assumption that the longer an account recelvable is outstanding the less likely that it will be collected. oubtful Accounts. The amount of the adjusting entry is the amount that will yield an adjusted balance for Allowance for D

Explanation / Answer

(a) Amount of the adjusting entry for uncollectible accounts = $23,900 - $4,500 = $19,400

(b) Bad debt expense = $19,400

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