Question
Use the data of Boilermaker Corp. for the year ended December 31, 2019 to answer the questions. Sales (70% on credit) $ 1,000,000 Accounts Receivable
Use the data of Boilermaker Corp. for the year ended December 31, 2019 to answer the questions.
Sales (70% on credit) $ 1,000,000
Accounts Receivable (at December 31, 2018) $150,000
Collection of Accounts Receivable during 2019 $650,000
Allowance for Doubtful Accounts (before adjustment at December 31, 2019; credit balance) $2,500
Estimated amount of uncollectible accounts based on an aging analysis $5,500
a. What is the balance of (gross) accounts receivable account as of December 31, 2019?
b. What amount will be reported as bad debts expense on the income statement for 2019?
c. What will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?
d. What is the effect of omitting adjusting entry for bad debts (using the aging analysis) at December 31, 2019 on (i) net income and (ii) net realizable value of accounts receivable?
(i)
(ii)
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