Question

Analysis of Receivables Method

At the end of the current year, Accounts Receivable has a balance of $490,000; Allowance for Doubtful Accounts has a debit balance of $4,500; and sales for the year total $2,210,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $18,500.

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

SOLUTION : A
	CALCULATION OF AMOUNT OF ADJUSTING ENTRY FOR UNCOLLECTABLE ACCOUNTS
	Allowance for Doubtfull accounts is estimated =	$                  18,500	Credit
	Add: Allowance for Doubtfull Debts (Opening Bal.)	$                     4,500	Debit
	Amount of Adjusting entry	$                  23,000	Credit
	Answer = $ 23,000
SOLUTION : B
	CALCULATION OF ADJUSTED BALANCE OF ACCOUNT RECEIVABLE
	Account Receivable	$               4,90,000
	Less: Allowance for Dobtfull Debts	$                  23,000
	Net Account Receivable	$               4,67,000
	Answer = $ 467,000
	CALCULATION OF ADJUSTED BALANCE OF ALLOWANCE FOR DOUBTFULL DEBTS
	Allwance for doubtfull account balance = $ 23,000
	(Calculated in Solution A)
	CALCULATION OF ADJUSTED BALANCE OF BAD DEBT EXPENSES
	Bad debt expenses = amount of adjusting entry =	$                  23,000
SOLUTION : C
	Account Receivable	$               4,90,000
	Less: Allowance for Dobtfull Debts	$                  23,000
	Net Realizable Value	$               4,67,000
	Answer = $ 467,000