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Crane Company uses the percentage-of-receivables basis to record bad debt expense. Accounts receivable (ending balance) $550,000...

Crane Company uses the percentage-of-receivables basis to record bad debt expense.

Accounts receivable (ending balance) $550,000 (debit)
Allowance for doubtful accounts (unadjusted) 5,300 (debit)


The company estimates that 2% of accounts receivable will become uncollectible.

(a)

Prepare the adjusting journal entry to record bad debt expense for the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit


(b)

What is the ending (adjusted) balance in Allowance for Doubtful Accounts?

Ending (adjusted) balance in Allowance for Doubtful Accounts $


(c)

What is the cash (net) realizable value?

Cash (net) realizable value $

Solutions

Expert Solution

Crane Company
Answer a Amount $
Accounts receivable 550,000.00
Uncollectible amount at 2%     11,000.00
Add: Debit balance in allowance for doubtful account       5,300.00
Bad Debt Expense for the year     16,300.00
Adjusting entry
Account Debit $ Credit $
Bad Debt Expense     16,300.00
Allowance for doubtful account 16,300.00
Answer b Amount $
Ending (adjusted) balance in Allowance for Doubtful Accounts     11,000.00
Answer c
Accounts receivable (Gross) 550,000.00
Less: Allowance for Doubtful Accounts     11,000.00
Accounts receivable (Net) 539,000.00

ekkarill92 answered 1 year ago
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