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umka21 [38]
3 years ago
13

At the end of the current year, Accounts Receivable has a balance of $590,000; Allowance for Doubtful Accounts has a debit balan

ce of $5,500; and sales for the year total $2,660,000. 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 Receivable $ Allowance for Doubtful Accounts $ Bad Debt Expense $ c. Determine the net realizable value of accounts receivable.
Business
1 answer:
denpristay [2]3 years ago
6 0

Answer and Explanation:

a. The computation of uncollectible accounts and Journal entry is shown below:-

Bad Debt expenses Dr, $6,650

($2,660,000 × 1 ÷ 4× 1%)

       To Allowance for doubtful accounts $6,650

(Being uncollectible accounts is recorded)

b. The computation of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense is shown below:-

Accounts receivable = $590,000

Allowance for Doubtful Accounts = (Sales of the year × 1 ÷ 4 × 1%) - Credit balance

= ($2,660,000 × 1 ÷ 4 × 1%) - $5,500

= $6,650 - $5,500

= $1,150

Bad debt expenses = Sales of the year × 1 ÷ 4 × 1%

= $2,660,000 × 1 ÷ 4 × 1%

= $6,650

c. The computation of net realizable value of accounts receivable is shown below:-

Net realizable value = Accounts receivable - Allowance for Doubtful Accounts

= $590,000 - $1,150

= $588,850

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Full question:

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1 year ago
A company has $1,378 in inventory, $4,827 in net fixed assets, $664 in accounts receivable, $298 in cash, $626 in accounts payab
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Answer:

$7,167

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4 0
3 years ago
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When a company expands by entering new business areas, it is called growth through __________?
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Answer:

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Explanation:

Minimum transfer price when operating at capacity is the marginal cost + opportunity cost because when operating at capacity there are 2 elements involved - the cost at which it has made the units it will be transferring to another department within the organisation, and the profit it would have made if it had sold those units to others (opportunity cost)

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