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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