### Calculation of Bad Debt Expense and AdjustmentsAt the end of the current year, Accounts Receivable has a balance of $100,970; Allowance for Doubtful Accounts has a debit balance of $3,441; and sales for the year total $1,168,000. Bad debt expense is estimated at 1/2 of 1% of sales.**a. Determine the amount of the adjusting entry for bad debt expense.**The estimated bad debt expense is given by:Estimated Bad Debt Expense = 0.5% of Sales= 0.005 * $1,168,000= $5,840**b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.**To find the adjusted balance of Allowance for Doubtful Accounts:Adjusted Allowance for Doubtful Accounts = Initial Debit Balance + Bad Debt Expense= $3,441 + $5,840= $9,281| **Adjusted Balance** | **Amount ($)** ||--------------------------------------|-----------------|| Accounts Receivable | $100,970 || Allowance for Doubtful Accounts | $9,281 || Bad Debt Expense | $5,840 |**c. Determine the net realizable value of accounts receivable.**Net Realizable Value of Accounts Receivable = Accounts Receivable - Allowance for Doubtful Accounts= $100,970 - $9,281= $91,689Therefore, the net realizable value of accounts receivable is $91,689.

If a company has practice of creating allowance for bad debts based on sales, then the existing…

At the end of the current year, Accounts Receivable has a balance of $100,970; Allowance for Doubtful Accounts has a debit balance of $3,441; and sales for the year total $1,168,000. Bad debt expense is estimated at 1/2 of 1% of sales. a. Determine the amount of the adjusting entry for bad debt expense. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Adjusted Balance $ Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable.

At the end of the current year, Accounts Receivable has a balance of $100,970; Allowance for Doubtful Accounts has a debit balance of $3,441; and sales for the year total $1,168,000. Bad debt expense is estimated at 1/2 of 1% of sales. a. Determine the amount of the adjusting entry for bad debt expense. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Adjusted Balance $ Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject :- Accounting
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Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $790,000; Allowance for Doubtful Accounts has a debit balance of $7,000; and sales for the year total $3,560,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $37,800. 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 Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable.