Asked by Karmel Abdeljalil on Jun 13, 2024
Verified
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 the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts, respectively.
A) $19,500 and $25,000
B) $30,500 and $525,000
C) $19,500 and $525,000
D) $30,500 and $25,000
Allowance for Doubtful Accounts
An accounting provision made to accommodate likely losses on accounts receivable due to customers being unable to pay.
Adjusting Entry
A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period for more accurate financial statements.
Accounts Receivable
Money owed to a business by its customers for goods or services that have been delivered or used but not yet paid for.
- Compute the anticipated uncollectible accounts by employing the percentage of sales and analysis of receivables techniques.
- Note the steps for calculating, modifying, and expunging uncollectible accounts receivable within journal entries.
- Determine the net realizable value of accounts receivable after adjustments for bad debts.
Verified Answer
Learning Objectives
- Compute the anticipated uncollectible accounts by employing the percentage of sales and analysis of receivables techniques.
- Note the steps for calculating, modifying, and expunging uncollectible accounts receivable within journal entries.
- Determine the net realizable value of accounts receivable after adjustments for bad debts.
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