At the End of the Current Year, Accounts Receivable Has

question 135

Essay

At the end of the current year, Accounts Receivable has a balance of $675,000; Allowance for Doubtful Accounts has a debit balance of $5,400; and sales for the year total $3,000,000. An analysis of receivables indicates the uncollectible receivables are estimated to be $45,000.?Determine
(a) the amount of the adjusting entry for bad debt expense;
(b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and
(c) the net realizable value of accounts receivable.

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Definitions:

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay its shareholders and debt holders, weighted according to the proportion of equity and debt in the company's capital structure.

Return on Equity

A financial ratio indicating the profitability of a company relative to its shareholders' equity, calculated as net income divided by shareholders' equity.

Weighted Average Cost of Capital (WACC)

A calculation of a firm's cost of capital in which each category of capital (debt, equity, etc.) is proportionately weighted, representing the average rate that a company is expected to pay for all its financing sources.

Market Price

The immediate valuation at which one can transact assets or services in the market sector.