Business, 19.10.2019 03:20 asialuv

At the end of the current year, accounts receivable has a balance of $550,000; allowance for doubtful accounts has a credit balance of $5,500; and net sales for the year total $2,500,000. an analysis of receivables estimates uncollectible receivables as $25,000.

determine:

a) the amount of the adjusting entry for bad debt expense

b) the adjusted balances of accounts receivable, allowance of doubtful accounts, and bad debt expense.

c) the net realizable value of accounts receivable.

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Answer from: Galycon12

A) The amount of the adjusting entry for bad debt expense

Bad debt expense$ 19,500

Allowance for Uncollectible Accounts $ 19,500

B) The adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts, and Bad Debt Expense.

Final Balance

Accounts Receivable$ 550,000Debit

Allowance for Uncollectible Accounts $ 25,000Credit

Bad debt expense $ 19,500Debit

C) The Net Realizable Value of Accounts Receivable.

Net Accounts Receivable$ 525,000Debit

Explanation:

It's necessary to entry the next journal entry to adjust the the Allowance for Uncollectible Accounts.

Bad debt expense$ 19,500

Allowance for Uncollectible Accounts $ 19,500

Accounts Uncollectible are those credit that the company give and there are not chances of been collected.

When the customers buy products on credits but then the company can't collect the debt, then it's necessary to write off the unpaid bill as uncollectible

One way it's to write-off directly the bad debts at the moment decided that the credit are uncollectible, the total amount it's reported as bad debt expenses which affect negativly the income statement and the accounts receivable are reduced in the same amount, less assets.

The other way it's to determine a percentage of total amount of accounts receivables as uncollectible, exist many ways to analize the accounts receivable and figure the value of uncollectible.

When the company has the percentage of uncollectible accounts the journal entry required is Bad Expenses (debit) with Allowance for Uncollectible Accounts (credit)

At the moment of the write-off, as the expenses were just recognized we only use the Allowance for Uncollectible Accounts (Debit) with Accounts Receivable (Credit), with this we are recognizing the uncollectible credit of the company.

Answer from: Quest

Ithinks it’s a and d

Answer from: Quest

The answer should be b.

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