At the End of the Current Year, Accounts Receivable Has

question 147

Essay

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000.​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.

---

Definitions:

Encumbrance System

an accounting system used primarily in governmental accounting to record commitments made on future expenditures before they are actually incurred.

Commitments

Obligations that an entity has agreed to fulfill in the future, which can include financial contracts, purchase agreements, or other binding agreements.

Acquisition

The process of acquiring control of another company by purchase of its shares or assets.

Not-For-Profit Organizations

Organizations that use surplus revenues to achieve their goals rather than distributing them as profit or dividends.