At the beginning of 2010. Delta\'s Accounts Receivable (net of Allowance of $2,

Question

At the beginning of 2010. Delta's Accounts Receivable (net of Allowance of $2, 350) were $140, 000. Delta's sales in 2010 Heir $1, 050, 000. 80% of which were on credit. Collections on account during the year were $670, 000. The company wrote off $4.000 of uncollectible Accounts during the year. Assume Delta estimates that bad debt expense is 3% of credit sales. Compute the following: Ending balance in Allowance for Doubtful Accounts: Ending balance in Accounts Receivable; Now assume instead that Delta expects uncollectible amount to be 6% of year-end accounts receivable. What is the: Journal entry to record Bad Debt Expense: Net Accounts Receivable: Assume a company uses the Allowance Method of recording bad debts. How does each of the following events affect the net realizable value of receivables?

Explanation / Answer

A. Ending balance in Allowance for doubtful debts $25,200 Ending balance in Accounts receivable $306,000 B. Journal Entry Bad debts expenses $20,010 Allowance for doubtful accounts $20,010 Net Accounts receivable $287,640 C. Bad debts expense Increase - decrease Decrease - increase No effect - No effect Write off - Increase - decrease Decrease - Increase No effect - no effect

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