[prmsblndr]

I need some help figuring out how to find the last 2 answers to this question. I figured out a by muliplying 7126000 by .0025 (which is 1/4 of 1%). But I cannot seem to figure out the other two. Can someone explain to me how to figure them out.


Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of 1/4 of 1% of the net sales of $7,126,000 for the year, determine the following:
a. Uncollectible accounts expense for the year.
b. Balance in the allowance account after the adjustment of December 31.
c. Expected net realizable value of the accounts receivable as of December 31.

a. 17815
b.
c.

[Maranon2]

B. The method you are talking about is the Estimate based on sales. You will take the 17,815 and add that amount to whatever the balance you already have in the Allowance for Doubtful Accounts (that is your answer for B). I’m assuming that they had given you an amount for the Allowance for Doubtful Accounts when you did the analysis of receivables.

C. Accounts Receivable minus the balance in the Allowance for Doubtful Accounts (the answer for B) is your net realizable value.