At the end of the current year, Accounts Receivable has a balance of $3,460,000, Allowance for Doubtful Accounts has a debit balance of $12,500, and sales for the year total $46,300,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $245,000.
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. $257,500 ($245,000 + $12,500) b. Accounts Receivable...................................................... Allowance for Doubtful Accounts.................................... Bad Debt Expense......................................................... c. Net realizable value ($3,460,000 – $245,000)........................ $3,215,000