accounting 200 ch 8 part 2

Johnson Company uses the percent of receivables method for recording bad debts expense. The accounts receivable balance is $75,000. Management estimates that 5% of accounts receivable are uncollectible. What is the cash (net) realizable value of the accounts receivable after the adjusting entry is made?

$71,250. calculations: Net realizable value = accounts receivable balance - estimated uncollectible accounts receivable. 75,000(0.05) = 3,750 = estimated uncollectible amount 75,000 - 3,750 = 71,250

Manning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $240,000. Management estimates that 5% of accounts receivable will be uncollectible. If the Allowance for Doubtful Accounts has a credit balance of $1,500 before adjustment, what amount of Bad Debt Expense does Manning recognize?

10,500. we need to have 12,000 in total. ((240,000 from acct receivable)(0.05 estimated percent)) - 1500 credit balance from doubtful accts

If the allowance method is used and the cash realizable value of Accounts receivable is $364,000, what is Net Accounts Receivable after writing off $12,000 ?

364,000. We decrease the accounts receivable and the allowance for doubtful accounts so in this case there would be no change to the net accounts receivable

If the Jackson Company had a beginning balance in the allowance for doubtful accounts of $1,000 credit, and wrote off $3,000 in accounts during the year and prepared an adjusting journal entry to the allowance account for $10,000, what is the ending balance in the Allowance for Doubtful Accounts?

8,000. 1,000 credit - 3,000 debit = over drawn by 2,000 10,000 adjusted entry - 2,000 we were overdrawn = 8,000

Manning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $240,000. Management estimates that 5% of accounts receivable will be uncollectible. If the Allowance for Doubtful Accounts has a debit balance of $1,500 before adjustment, what is the entry to record the bad debt expense and create the proper balance in the AFDA?

Debit Bad Debt Expense 13,500; Credit Allowance for Doubtful Accounts 13,500

When the allowance method is used to account for uncollectible accounts, Bad Debts is debited when

management estimates uncollectible accounts at the end of the accounting period.

When we do a write off, what do we decrease?

we decrease both accounts receivable and the allowance