Saturn Company's Accounts Receivable account has a balance of $2,400,000 at the end of the year, and the company estimates the Net Realizable Value of Accounts Receivable to be $2,304,000. The Allowance for Doubtful Accounts has a credit balance of $54,000 at the beginning of the current year, and during the year, Saturn wrote off $45,000 of accounts receivable.
The year-end adjusting entry would require a:

Question

Quizplus · Accepted Answer

Allowance for Doubtful Accounts = $2,400,000 - $2,304,000 = $96,000
Year-end Allowance for Doubtful Accounts, before adjustment = $54,000 - $45,000 = $9,000
Required Allowance adjustment = $96,000 - $9,000 = $87,000
The year-end adjusting entry:
Bad debts expense 87,000
$\quad $ $\quad $ $\quad $ Allowance for doubtful accounts 87,000
To record the bad debts expense for the year.

Saturn Company's Accounts Receivable Account Has a Balance of $2,400,000