Question

Percent of Sales Method

At the end of the current year, Accounts Receivable has a balance of $680,000; Allowance for Doubtful Accounts has a debit balance of $6,000; and sales for the year total $3,060,000. Bad debt expense is estimated at 1/4 of 1% of sales.

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

Answer
a
Amount of adjusting entry	$          7,650	3060000*1%*1/4
b
Accounts Receivable	$      680,000
Allowance for Doubtful Accounts	$          1,650	7650-6000
Bad Debt expense	$          7,650
c
Accounts Receivable	$      680,000
Less: Allowance for Doubtful Accounts	$          1,650
Net realizable value	$      678,350