Question

At the end of the current year, Accounts Receivable has a balance of $2,150,000; Allowance for Doubtful Accounts has a debit balance of $10,500; and sales for the year total $51,850,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $110,000.

Answer 1

The amount for adjusting entry of uncollectible accounts is $120,500.

The adjusted balance of accounts receivable shall be $2,150,000.

The adjusted credit balance for the allowance of doubtful accounts is $110,000.

The adjusted debit balance of bad debts expense is $120,500.

The net realizable value of accounts receivable is $2,040,000.

Explanation:

step 1. The allowance for doubtful accounts = unadhusted balance plus adjusted balance

= $10500 plus $110000 = $120500

The amount of adjusting entry for uncollectible accounts is $120500

step 2. the adjusted balance of accounts receivable shall be $2150000

The unadjusted balance of accounts receivable will also be the adjusted balance of accounts receivable as there is no bad debt expense that is to be adjusted from accounts receivable. Therefore, the adjusted balance at the end of the current year is $2,150,000.

step 3. The allowance for doubtful accounst is as follows

Adjusted balance = bad debt minus unadjusted balance

= $120500 minus $10500 = $110000

The adjusted credit balance for the allowance of doubtful accounts is $110,000.

step 4. adjusted bad debt expense = $10500 plus $110000 = $120500

The adjusted debit balance of bad debts expense is $120,500.

step 5. net realizable value = $2150000 minus $110000 = $2040000

The net realizable value of accounts receivable is $2,040,000.