At the end of the current year, Accounts Receivable has a balance of $3,750,000,
Allowance for Doubtful Accounts has a credit balance of $22,750, and sales for the year total $48,400,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $390,000.
Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.
Answer:
a. $367,250 ($390,000 – $22,750) b. Accounts Receivable...................................................... Allowance for Doubtful Accounts.................................... Bad Debt Expense......................................................... c. Net realizable value ($3,750,000 – $390,000)........................ $3,360,000