Chapter 9 Study Guide (Bonus Points) Question Percent of Sales Method At the end

Question

Chapter 9 Study Guide (Bonus Points) Question

Percent of Sales Method

At the end of the current year, A claim against the customer created by selling merchandise or services on credit.Accounts Receivable has a balance of $3,460,000; The contra asset account for accounts receivable.Allowance for Doubtful Accounts has a debit balance of $12,500; and sales for the year total $46,300,000. The operating expense incurred because of the failure to collect receivables.Bad Debt Expense is estimated at ½ 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 The amount that is expected to be collected or realized.net realizable value of accounts receivable.

$

$

Explanation / Answer

a)

b)

c)

Date Accounts and explanations Debit ($) Credit ($) Bad debt expense ($46,300,000*1/100*1/2) 231,500    Allowance for doubtful accounts 231,500 (To record the estimation of bad debts at 1/2 of 1%)

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