A company had credit sales of $5.0 million for the year and estimates their bad debts to be 1% of net credit sales. The accountant for the company is thinking about switching to the aging of accounts receivable method and after preparing the aging schedule, the estimate equals $48,000. Accounts receivable has a $450,000 balance and the allowance for doubtful accounts has acredit balance of $3,000 prior to adjustment. Show your work.
a. The journal entry to adjust the books when the net credit sales method is used to account for bad debts will be: debit and credit?
b. The journal entry to record bad debts expense when the aging of accounts receivable method is used would be:?
c. What will be the ending balance in the allowance for doubtful accounts after the accounts have been adjusted when the net credit sales method was used?
d. What will be the ending balance in the allowance for doubtful accounts after the accounts have been adjusted when the aging of accounts receivable method was used ?
e. What is the net realizable value of accounts receivable after adjustment when the net credit sales method is used?
f. What is the net realizable value of accounts receivable after adjustment when the aging of accounts receivable method isused?
g. A $2,000 customer account is written off after the adjusting entry has been made and the financial statements prepare dunder the net credit sales method. What is the net realizable value of accounts receivable after the account is writtenoff?