Question

analysis of recievables method

Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $775,000; Allowance for Doubtful Accounts has a credit balance of $7,000; and sales for the year total $3,490,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $32,900. 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. >> Deter

Answer 1

Requirement a

Amount of adjustment = $25,900.

.

Requirement b

Ending balances

Accounts receivable	$ 775,000.00
Allowance for doubtful accounts	$    32,900.00
Bad debts expense	$    25,900.00

.

Requirement c

Cash (net) realizable value

$ 742,100.00

Working

Estimated balance of allowance for uncollectables	$      32,900.00	Cr
Balance in Allowance for uncollectable account (Cr)	$        7,000.00	Cr
Total bad debts to be recorded	$      25,900.00	Cr

Entry to be recorded for adjustment of bad debts

Transaction	General Journal	Debit	Credit
(a)	Bad debts expense	$        25,900.00
	Allowance for doubtful accounts		$       25,900.00
	(To record bad debts expense)

.

Accounts receivable	$ 775,000.00
Less: Allowance for doubtful accounts	$    32,900.00
Cash (net) realizable value	$ 742,100.00