At the end of the current year, Accounts Receivable has a balance of $325,000; A

Question

At the end of the current year, Accounts Receivable has a balance of $325,000; Allowance for Doubtful Accounts has a credit balance of $3,900, and the net sales for the year total $4,500,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $25,000. Determine (a) th amount of the adjusting entry for uncollectable accounts; (b) the adjusted balances of Accounts Receivablre, Allowance for Doubtful Accounts, and Bad Debt Expense: and (c) the net realizable value of accounts receivable.

Explanation / Answer

(a) th amount of the adjusting entry for uncollectable accounts; mmddyy Allowance for Doubtful Debts Dr 25000 Accounts Receivable Cr 25000 (b) the adjusted balances of Accounts Receivablre, Adjusted Bal of Acct Rx will be Accounts Receivable $325,000 Less: Allowance for Doubtful Accounts - (25000) Accounts Receivable $300,000 Allowance for Doubtful Accounts, and Bad Debt Expense mmddyy Bad Debt Exp Dr 25,000 Allow for Bad debts Cr 25,000 (c) the net realizable value of accounts receivable. Accounts Receivable $325,000 Less: Allowance for Doubtful Accounts - (25000+3900) Accounts Receivable, net $296,100

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