Question

Analysis of Receivables Method

At the end of the current year, Accounts Receivable has a balance of $480,000; Allowance for Doubtful Accounts has a debit balance of $4,500; and sales for the year total $2,160,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $17,100.

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.
$

Answer 1

Required A :

Amount of Adjusting entry for Uncollectible Accounts = Ending Allowance for Doubtful Accounts + Beginning Allowance for Doubtful Accounts

Amount of Adjusting entry for Uncollectible Accounts = $ 17,100 + $ 4,500

Amount of Adjusting entry for Uncollectible Accounts = $ 21,600

Required B :
Particulars	Amount ($)
Accounts Receivable	$ 480,000
Allowance for Doubtful Accounts	$ 17,100 (See Note 1 Below)
Bad Debts Expense	$ 21,600 (See Required A )

Note 1 :

Allowance for Doubtful Accounts = Bad debts Expense - Beginning Allowance for Doubtful Accounts

Allowance for Doubtful Accounts = $ 21,600 - $ 4,500

Allowance for Doubtful Accounts = $ 17,100

Required C :

Net Realizable value of Accounts receivable = Accounts receivable - Allowance for Doubtful Accounts

Net Realizable value of Accounts receivable = $ 480,000 - $ 17,100

Net Realizable value of Accounts receivable = $ 462,900