Before year-end adjusting entries, Bass Company's account balances at December 31, 2007, for accounts receivable and the related allowance for uncollectible accounts were $600,000 and $45,000, respectively.An aging of accounts receivable indicated that $62,500 of the December 31 receivables are expected to be uncollectible.The net realizable value of accounts receivable after adjustment is

Question

Quizplus · Accepted Answer

The adjustment entry will be:
Bad debt expense = $62,500
Allowance for uncollectible accounts = $62,500

After the adjustment, the allowance for uncollectible accounts will be $107,500 ($45,000 + $62,500) and the net realizable value of accounts receivable will be $537,500 ($600,000 - $62,500). Therefore, the best choice is B.

Before Year-End Adjusting Entries, Bass Company's Account Balances at December