At the end of the current year, Accounts Receivable has a balance of $800,000, Allowance for Doubtful Accounts has a credit balance of $7,500, and sales for the year total $3,500,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $30,000. 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
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
At the end of the current year,
balance of $800,000, Allowance for Doubtful Accounts
has a credit balance of $7,500, and sales for the year
total $3,500,000. Using the aging method, the balance of
Allowance for Doubtful Accounts is estimated as
$30,000.
Determine (a) the amount of the
uncollectible accounts; (b) the adjusted balances of
Accounts Receivable, Allowance for Doubtful Accounts,
and
accounts receivable.
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