At the end of the current year, Accounts Recievable has a balance of 700,000; Al

Question

At the end of the current year, Accounts Recievable has a balance of 700,000; Allowance for doubtful accounts has a credit balance of $5500; and net sales foee the year 3,500,000. Bad debt expense is estimated at 1/2 of 1% of net sales.

Determine:
(a) Amount of adjusting entry for uncollectible accounts $_________________

(b) Adjust balance of Accounts Receivable $____________________
allowance od doubful Accounts $____________________
Bad Debt Expense $____________________

(c) Net realizable value of accounts recievable $_______________

Explanation / Answer

Bad debt expense is estimated at 1/2 of 1% of net sales = (1/2)*1%*3,500,000 = $17,500 (a) Amount of adjusting entry for uncollectible accounts $ 17500 (b) Adjust balance of Accounts Receivable $700000-17500 =682500 Allowance od doubful Accounts $5500+17500=23000 Bad Debt Expense $ 17500 (c) Net realizable value of accounts recievable $ 700000-23000 = 677000

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