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the end of the current year, Accounts Receivable has a balance of $520,000; Allowance for Doubtful Accounts has a credit balance of $4,500; and sales for the year total $2,340,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $19,800. 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 $ 520,000 Allowance for Doubtful Accounts $ Bad Debt Expense $ c. Determine the net realizable value of accounts receivable. $

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hyderali230

Answer:

a.

$15,300

b.

Accounts Receivable $ 520,000

Allowance for Doubtful Accounts $19,800

Bad Debt Expense $15,300

c.

$500,200

Explanation:

Bad debt Expense will be calculated using the percentage of debt loss. The expense will be calculated using the account receivable balance.

Allowance for Doubtful Accounts is estimated as $19,800

Current Balance = $4,500 credit

a.

As Allowance for Doubtful Accounts already have credit balance of $4,500, we need to adjust the remainder to make the closing balance of Allowance for Doubtful Accounts $19,800 at the year end.

Adjustment Value = $19,800 - $4,500 = $15,300

b.

Adjusted Balances

Accounts Receivable $ 520,000

Allowance for Doubtful Accounts $19,800

Bad Debt Expense $15,300

c.

Net realizable value of Accounts receivable is the net value of Account receivable and Allowance for Doubtful Accounts.

Net realizable value of accounts receivable = $520,000 - $19,800 = $500,200