The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2013, the allowance account had a credit balance of $77,900. Credit sales for 2013 totaled $2,460,000 and the year-end accounts receivable balance was $520,000. During this year, $75,500 in receivables were determined to be uncollectible. Manda Panda anticipates that 4% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31.

(1) Does this situation describe a loss contigency? Yes or No

(2) What is the bad debt expense that Manda Panda should report in its 2013 Income Statement?

(3) Prepare the appropriate journal entry to record the contingency.

(4) What is the Net Realizable Value (book value) Manda Panda Should report in its 2013 Balance Sheet

Accounts Receivable
Ending Balance:
Allowance for Uncollectable Accounts
Beg Balance:		$ 77,900.00
Ending Balance:
Balance Sheet
Accounts Recv:
Allowance for Uncollectable Accounts:
Net Realizable Value: