Prior to the Year-End Adjustment to Record Bad Debt Expense

question 62

Essay

Prior to the year-end adjustment to record bad debt expense for 2014 the general ledger of Stickler Company included the following accounts and balances: Cash collections on accounts receivable during 2014 amounted to $450,000. Sales revenue during 2014 amounted to $800,000, of which 75% was on credit, and it was estimated that 2% of these credit sales made in 2014 would ultimately become uncollectible.
Required:
A. Calculate the bad debt expense for 2014.
B. Determine the adjusted 2014 year-end balance of the allowance for doubtful accounts.
C. Determine the net realizable value of accounts receivable for the December 31, 2014 balance sheet.

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Definitions:

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