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 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 for Doubtful Accounts, and Bad Debt Expense; and
(c) the net realizable value of accounts receivable.

Question

Christiane Blessmann · Accepted Answer

Final Answer :   (a)  $ 19 , 500 ( $ 25 , 000 − $ 5 , 500 )  (b)   Accounts Receivable   Adjusted Balance   Allowance for Doubtful Accounts  ( $ 5 , 500 + $ 19 , 500 ) $ 550 , 000  Bad Debt Expense  25 , 000 19 , 500  (c)   Net realizable value  ( $ 550 , 000 − $ 25 , 000 ) $ 525 , 000 \begin{array} { | l | l | r | } \hline 	ext { (a) }  &  \$ 19,500 ( \$ 25,000 - \$ 5,500 )  &  \\hline 	ext { (b) }  &  	ext { Accounts Receivable }  &  	ext { Adjusted Balance } \\hline  &  	ext { Allowance for Doubtful Accounts } ( \$ 5,500 + \$ 19,500 )  &  \$ 550,000 \\hline  &  	ext { Bad Debt Expense }  &  25,000 \\hline  &   &  19,500 \\hline 	ext { (c) }  &  	ext { Net realizable value } ( \$ 550,000 - \$ 25,000 )  &  \$ 525,000 \\hline\end{array}  (a)   (b)   (c)  ​ $19 , 500 ( $25 , 000 − $5 , 500 )  Accounts Receivable   Allowance for Doubtful Accounts  ( $5 , 500 + $19 , 500 )  Bad Debt Expense   Net realizable value  ( $550 , 000 − $25 , 000 ) ​  Adjusted Balance  $550 , 000 25 , 000 19 , 500 $525 , 000 ​ ​

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