Asked by Paulina Martinez on Jun 11, 2024
Verified
For each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt Expense to be recorded, the balance in Allowance for Doubtful Accounts after adjustment at December 31, and the net realizable value of accounts receivable at December 31.
(a) Based on an analysis of Simmons Company's $380,000 balance in Accounts Receivable at December 31, it was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment.
(b) Blake Company had credit sales of $900,000 at year-end, an Accounts Receivable balance of $425,000 at December 31, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment. Blake estimates bad debt expense as ¾ of 1% of credit sales.
(c) Hidgon Inc. has a balance of $812,000 in Accounts Receivable at December 31. An analysis of those receivables shows $24,000 will probably not be collected. Before adjusting entries are prepared, Allowance for Doubtful Accounts has a debit balance of $750.
Adjusting Journal Entry
A record in accounting that is used to adjust incomes and expenses to match the accounting period in which they actually occurred.
Net Realizable Value
The estimated selling price of goods minus the costs of their sale or disposal.
Allowance For Doubtful Accounts
An account opposite to assets that predicts the amount of accounts receivable that might not be recoverable.
- Calculate the provision for doubtful debts and comprehend its influence on the financial reports.
Verified Answer
AM
Alexandria MosleyJun 13, 2024
Final Answer :
0 (a) Bad debt expense $14,300 Allowance for doubtful accounts at Dec. 3115,500\begin{array} { l r } \text { (a) Bad debt expense } & \$ 14,300 \\ \text { Allowance for doubtful accounts at Dec. } 31 & 15,500 \end{array} (a) Bad debt expense Allowance for doubtful accounts at Dec. 31$14,30015,500
Net realizable value of accounts receivable at
Dec. 31 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 364,500
(b) Bad debt expense $6,750 Allowance for doubtful accounts at Dec. 3117,750\begin{array} { l r r } \text { (b) Bad debt expense } & \$ & 6,750 \\ \text { Allowance for doubtful accounts at Dec. } 31 & 17,750 \end{array} (b) Bad debt expense Allowance for doubtful accounts at Dec. 31$17,7506,750
Net realizable value of accounts receivable at
Dec. 31 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 407,250
(c) Bad debt expense $24,750\quad \$ 24,750$24,750
Allowance for doubtful accounts at Dec. 3124,00031 \quad 24,0003124,000
Net realizable value of accounts receivable at
Dec. 31 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 788,00
Net realizable value of accounts receivable at
Dec. 31 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 364,500
(b) Bad debt expense $6,750 Allowance for doubtful accounts at Dec. 3117,750\begin{array} { l r r } \text { (b) Bad debt expense } & \$ & 6,750 \\ \text { Allowance for doubtful accounts at Dec. } 31 & 17,750 \end{array} (b) Bad debt expense Allowance for doubtful accounts at Dec. 31$17,7506,750
Net realizable value of accounts receivable at
Dec. 31 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 407,250
(c) Bad debt expense $24,750\quad \$ 24,750$24,750
Allowance for doubtful accounts at Dec. 3124,00031 \quad 24,0003124,000
Net realizable value of accounts receivable at
Dec. 31 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 788,00
Learning Objectives
- Calculate the provision for doubtful debts and comprehend its influence on the financial reports.