Exam # 3 33. At the end of the current year, Accounts Receivable has a balance o

Question

Exam # 3 33. At the end of the current year, Accounts Receivable has a balance of $575,000; Allowance for Doubtful Accounts has a credit balance of $7,600; and net sales for the year total $3,500,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $30,000. Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balance of Accounts Receivable, Allowance of Doubtful Accounts;, and Bad Debt Expense; and (c) the net realizable value of accounts receivable. (10 points) Page 10 12 -

Explanation / Answer

Working:

a. Adjustment entry to be made for 22400 b. Adjusted balances of :         (i)    Accounts receivable 575000 Dr         (ii) Allowance for doubtful accounts 30000 Cr        (iii) Bad debts account 22400 Dr c. Net realizable value of accounts receivable       Balance in accounts receivable account 575000       Less: Allowance for doubtful accounts -30000      Net realizable value of accounts receivable 545000

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