Question
ZZZ Company had the following data available in the following general ledger accounts at the end of 2008 (after already recording sales for the year,
ZZZ Company had the following data available in the following general ledger accounts at the end of 2008 (after already recording sales for the year, cash collections of accounts receivable and any accounts receivable that were written-off during the year): Accounts receivable . . . . . . . . . . . . $400,000 debit balance Allowance for doubtful accounts . . . . . $2,000 credit balance Net credit sales for the year . . . . . . . $900,000 credit balance Now on December 31, 2008, it is time for the Company to estimate its bad debts expense for the year. Prepare the journal entry to recognize bad debts expense for the year using (A) the income statement approach and (B) the balance sheet approach under the following assumptions: (Note that situations A and B are independent of each other.)
A) Bad debt expense is expected to be 1% of net credit sales for the year (
B) The Company expects that it 3% of the balance in accounts receivable will be uncollectible.
What is the amount of the net realizable value of accounts receivable after recording the journal entry in each of the two situations from the previous question?
A) net realizable value % of sales:
B) net realizable value % of account receivable:
Please answer the second question net realizable value in both cases
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started