Inc. (2018).pdf - Adobe Acrobat Pro DC 9-11 (448 of 1357) Valuation and Disposition of Accounts Receivable 9-11 DO IT! 2a | Bad Debt Expense Brule Corporation has been in business for 5 years. The unadjusted trial balance at the end of the current year shows Accounts Receivable $30,000, Sales Revenue $180,000, and Allowance for Doubtful Accounts with a debit balance of $2.000. Brule estimates bad debts to be 10% of accounts receivable. Prepare the entry necessary to adjust Allowance for Doubtful Accounts. ACTION PLAN . Estimate the amount the company does not expect to collect. . Consider the existing balance in the allowance account when using the percentage-of-receivables basis. Report receivables at their cash (net) realizable value that is, the amount the company expects to collect in cash. Solution Brule should make the following entry to bring the debit balance in Allowance for Doubtful Accounts up to a normal, credit balance of $3.000 (10% x $30,000): Bad Debt Expense (10% x $30,000) + $2.000] 5.000 Allowance for Doubtful Accounts (To record estimate of uncollectible accounts) 5.000 Related exercise material: BE9.3, BE9.6, DO IT! 9.2.1, E9.4, E9.5, E9.6, E9.7, and 19.8. Disnesing of Accounts Receivable