Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance...

Analysis of Receivables Method

At the end of the current year, Accounts Receivable has a balance of $465,000; Allowance for Doubtful Accounts has a debit balance of $4,000; and sales for the year total $2,090,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $20,800.

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.
$

Solutions

Expert Solution

All working forms part of the answer
Requirement ‘a’

Unadjusted Balance of Allowance for Doubtful account	$ 4,000.00	Debit
Adjusted balance that should exist using aging method	$ 20,800.00	Credit
Amount of adjusting entry for uncollectible accounts	$ 24,800.00	Account to be credited with $24,800 [$4000 for making debit balance go, $20800 for making balance equal to $20800 credit balance.

Journal Entry with the Amount of adjusting entry:

Accounts title	Debit	Credit
Bad Debt Expenses	$ 24,800.00
Allowance for Doubtful accounts		24800
(bad debt expense recorded)

Requirement (b)

Adjusted Balances

Accounts receivables	$ 4,65,000.00	Debit
Allowance for Doubtful Accounts	$ 20,800.00	Credit
Bad Debt expense	$ 24,800.00	Debit

Requirement (c)

Gross Accounts Receivables	$ 4,65,000.00
Allowances for Doubtful Accounts	$ (20,800.00)
Net Realizable value of Accounts receivables	$ 4,44,200.00

ekkarill92 answered 1 year ago

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