Answer:
Answer would be d. eats
Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $895,000; Allowance for Doubtful Accounts has a credit balance of $8,000; and sales for the year total $4,030,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $31,200. 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. 000 Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable.
To determine the amount of the adjusting entry for uncollectible accounts using the aging method, we need to calculate the estimated bad debt expense.
The aging method applies different percentages to different age groups of accounts receivable to estimate the portion that may become uncollectible. Here is a sample calculation:
0-30 days 2% $895,000 × 2% = $17,900
31-60 days 5% $895,000 x 5% = $44,750
Over 60 days 10% $895,000 x 10% = $89,500
Total estimated uncollectible amount = $17,900 + $44,750 + $89,500 = $152,150
The adjusting entry for uncollectible accounts will be:
Bad Debt Expense $152,150
Allowance for Doubtful Accounts $152,150
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