At the end of the current year, Accounts Receivable has a balance of $845,000; A

Question

At the end of the current year, Accounts Receivable has a balance of $845,000; Allowance for Doubtful Accounts has a debit balance of $7,500; and sales for the year total $3,800,000. Bad debt expense is estimated at 1/2 of 1% of sales a. Determine the amount of the adjusting entry for uncollectible accounts b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable.

Explanation / Answer

a) Adjusting entry for uncollectible accounts 19000 (3,800,000*1/2/*1%) b) Balances Account receivable 845,000 Allowance for Doubtful accounts (19000-7500)= 11500 Bad debts expense 19,000 c) Net realizable value 833,500 Analysis of Receivable method a) Adjusting entry for uncollectible accounts 23700 (29,200-5,500) b) Balances Account receivable 595,000 Allowance for Doubtful accounts 29,200 Bad debts expense 23,700 c) Net realizable value 565,800 Note receivable a) Due date of the note 7-Aug april 9 to april 30 21 may 31 june 30 july 31 August 7 total 120 b) Maturity value of the note 24720 (24000 + 24000*9%*120/360) c) Cash 24720 note receivable 24,000 interest revenue 720

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