At the end of the current year, Accounts Receivable has a balance of $847,360 Al

Question

At the end of the current year, Accounts Receivable has a balance of $847,360 Allowance for Doubtful Accounts has a credit balance of $7,050 and net sales for the year total $2,766,000. Bad debt expense is estimated at 1/2 of 1% of net sales.

a. Determine the amount of the adjusting entry for bad debt expense.
$

b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.

c. Determine the net realizable value of accounts receivable.
$

Explanation / Answer

A. Bad debt Expenses = 1/2 of 1% of sales

= 1/2 * 1/100* 2766000

= $ 13830

B. Account Receivables = 847360 - 13830

= $ 833530

Allowance for doubtful Accounts = $7050

Bad debt Expense = $13830

C. Net realizable value = 847360-7050-13830

= $ 826480

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