Answer:
a. Required Adjustment $ 36400
b.Net Accounts Receivable $ 758600
Allowance for Doubtful Accounts $ 29400
Bad Debt Expense = $ 36400
c. Net Accounts Receivable $ 758600
Explanation:
Accounts Receivable $795,000;
Allowance for Doubtful Accounts $7,000 Dr
Sales for the year $3,580,000
Aging Method Allowance for Doubtful Accounts $29,400.
Allowance for Doubtful Accounts $7,000 Dr
<u>a. Required Adjustment $ 36400</u>
The entry would be
<em>Bad Debt Expense $ 36400 Dr</em>
<em>Allowance for Doubtful Accounts $ 36400 Cr</em>
<em>As the balance in the </em>Allowance for Doubtful Accounts was a debit balance so it is added to the new Allowance for Doubtful Accounts balance.
<em />
b. Accounts Receivable $795,000;
Less <em>Allowance for Doubtful Accounts $ 36400 Cr</em>
<em>Net Accounts Receivable $ 758600</em>
<em>Accounts Receivable amount is determined after deducting </em>Allowance for Doubtful Accounts from it.
<em />
<u><em> Allowance for Doubtful Accounts</em></u>
Beginning Balance $ $7,000 Dr
Expense Adjustments $ 36400
Ending Balance $29400
<em> Bad Debt Expense = $ 36400</em>
<em>As there are no write off the ending balance remains the same.</em>
<em />
<em>c. </em>Accounts Receivable $795,000;
Less <em>Allowance for Doubtful Accounts $ 36400 Cr</em>
<em>Net Accounts Receivable $ 758600</em>
<em>Net Accounts Receivable amount is determined after deducting </em>Allowance for Doubtful Accounts from it.
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