The trial balance before adjustment of ABC Company reports the following balances at the end of 2019:

Dr. Cr.

Accounts receivable $410,000

Unadjusted Allowance for doubtful accounts $10,200

Sales (all on credit) 910,000

Instructions

a) Prepare the year end adjusting journal entry for bad debt expense assuming that doubtful accounts are estimated to be 3% of gross accounts receivable.

b) Prepare the year end adjusting journal entry for estimated bad debt expense assuming that 6% of credit sales are not expected to be collected.

c) Compute net realizable value of accounts receivable under the % of receivables approach (after the year end adjusting entry to record bad debt expense has been made)

d) Compute net realizable value of accounts receivable under the % of sales approach (after the year end adjusting entry to record bad debt expense has been made)

e) On January 8, 2020, a customer declares bankruptcy and his $1,900 receivable is written off. Prepare the journal entry to record the write-off.

f) Does net realizable value of accounts receivable change after a write off? Explain in a sentence or two.