Accounting. At the end of the current year, Accounts Receivable has a balance of $90,000?

Question by : Accounting. At the end of the current year, Accounts Receivable has a balance of ,000?
6.At the end of the current year, Accounts Receivable has a balance of $ 90,000; Allowance for Doubtful Accounts has a credit balance of $ 850; and net sales for the year total $ 300,000. Bad debt expense is estimated at 2.5% of net sales.

Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt Expense; and (c) the net realizable value of accounts receivable.

Best answer:

Answer by smahadevan39
Uncollectible accounts Bad debt – 300,00 x 2.5% =7500

DR Doubtful accounts 850
DR Bad debts 6650
CR Accounts receivable 7500

DR Profit & Loss account 6650
CR Bad debts 6650

Net realised value of Accounts receivable is 90,000 – 7500 = 82,500

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