Percent of Sales Method At the end of the current year, Accounts Receivable has

Q: Percent of Sales Method At the end of the current year, Accounts Receivable has

SOLUTION A. The amount of the adjusting entry for uncollectible accounts- = 0.25% * Sales = 0.25% * $51,850,000 = $129,625 B. C. Net realizable value of accounts receivable = $2,150,000 - $119,125 = $2,030,875 Adjusted balance ($) Accounts Receivable 2,150,000 Allowance for Doubtful Accounts ($129,625 - $10,500) 119,125 Bad Debt Expense 129,625

ID: 2553751 • Letter: P

Question

Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $2,150,000; Allowance for Doubtful Accounts has a debit balance of $10,500; and sales for the year total $51,850,000. Bad Debt Expense is estimated at 1/4 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

SOLUTION

A. The amount of the adjusting entry for uncollectible accounts-

= 0.25% * Sales

= 0.25% * $51,850,000

= $129,625

C. Net realizable value of accounts receivable = $2,150,000 - $119,125 = $2,030,875

Adjusted balance ($) Accounts Receivable 2,150,000 Allowance for Doubtful Accounts ($129,625 - $10,500) 119,125 Bad Debt Expense 129,625

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Percent of Sales Method At the end of the current year, Accounts Receivable has

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Percent of Sales Method At the end of the current year, Accounts Receivable has

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