At the End of the Current Year, Accounts Receivable Has

question 95

Essay

At the end of the current year, Accounts Receivable has a balance of $900,000, the Allowance for Uncollectible Accounts has a debit balance of $1,000 and net credit sales for the year are $3,000,000. The company uses the percent-of-sales method. Its credit department has determined that uncollectible accounts will amount to 2% of net credit sales.
Required:
1. Prepare the year- end adjusting journal entry. Omit the explanation.
2. Determine the adjusted balances for Accounts Receivable and the Allowance for Uncollectible Accounts.
3. Determine the net realizable value of accounts receivable at the end of the year.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity controls the market price.

Marginal Cost

Marginal cost is the change in total cost that arises when the quantity produced changes by one unit. It's pivotal in decision-making processes regarding increasing or decreasing production.

Marginal Revenue

The extra financial gain from selling an additional unit of a product or service.

Profit

The profit earned when the revenue generated from a business operation surpasses all its associated expenses, costs, and taxes required for the operation.