Digital Learning* CengageNOwv2 | Online teachir* Cengage Learning+Assignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=falseA eBookShow Me HowPercent of Sales MethodAt the end of the current year, Accounts Receivable has a balance of $555,000; Allowance for Doubtful Accounts has a credit balance of $5,000; and sales forthe year total $2,500,000. Bad debt expense is estimated at 1/4 of 1% of sales.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 Receivable24Allowance for Doubtful AccountsBad Debt Expense%24c. Determine the net realizable value of accounts receivable.FeedbackCheck My Worka. Remember that since accounts receivable are created by credit sales, uncollectible accounts çan be estimated as a percent of credit sales. If theportion of credit sales to sales id relatively constant, the percent may be applied to total sales.b. Under the percent of sales method, the amount of the adjustment is the amount estimated for Bad Debt Expense.C. Remember that net realizable value is the amount that is expected to be collected or realized.PreviousNextCheck My WorkEmail InstructorSave and ExitSubmit Assignment for GradingAll work saved.

Solution a: Sales 2500000 *% of sales (1%*1/4) 0.25% Amount of Adjusting entry 6250…

At the end of the current year, Accounts Receivable has a balance of $555,000; Allowance for Doubtful Accounts has a credit balance of $5,000; and sales the year total $2,500,000. Bad debt expense is estimated at 1/4 of 1% of sales.

At the end of the current year, Accounts Receivable has a balance of $555,000; Allowance for Doubtful Accounts has a credit balance of $5,000; and sales the year total $2,500,000. Bad debt expense is estimated at 1/4 of 1% of sales.

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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At the beginning of the current period, Flounder Corp. had balances in Accounts Receivable of $224,000 and in Allowance for Doubtful Accounts of $10,080. During the period, it had net credit sales of $896,000 and collections of $854,560. It wrote off uncollectible accounts receivable of $8,176. Uncollectible accounts are estimated to total $28,000 at the end of the period. (Omit recording cost of goods sold.) (a-c) Enter the beginning balances for Accounts Receivable and Allowance for Doubtful Accounts in a tabular summary. Use the summary to record transactions (a), (b), and (c) below. (a) Record sales and collections during the period. (b) Record the write-off of uncollectible accounts during the period. (c) Record bad debt expense for the period.
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