Prior to the adjusting entry for bad debt expense, Funnel, Inc.'s balances for Accounts Receivable and Allowances for Doubtful Accounts were $720, 000 (debit)and $3, 500 (credit), respectively.After the bad debt expense entry was posted, the net realizable value of accounts receivable was $650, 000.Bad debt expense for the year

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The net realizable value of accounts receivable is calculated as Accounts Receivable minus Allowance for Doubtful Accounts. Initially, it was $720,000 - $3,500 = $716,500. After adjusting, it became $650,000. The difference of $66,500 ($716,500 - $650,000) is the bad debt expense for the year.

Prior to the Adjusting Entry for Bad Debt Expense, Funnel