Answer:
1. Dr Bad debt expense16,500
Cr Allowance for uncollectible accounts16,500
2. Bad debt expense$16,500
Allowance for uncollectible accounts=$13,600
3. $122,400
Explanation:
1. Preparation of the Journal entry to Record the adjustment for uncollectible accounts on December 31, 2012.
Dec. 31,2012
Dr Bad debt expense16,500
Cr Allowance for uncollectible accounts 16,500
($136,000 × 10% + $2,900 = $16,500)
2. Calculation to Determine the amount at which bad debt expense and allowance for uncollectible accounts is reported
Bad debt expense is reported in the income statement as :
Bad debt expense$16,500
($136,000 × 10% + $2,900 = $16,500)
Allowance for uncollectible accounts is reported in the balance sheet as:
Using this formula
Allowance for uncollectible accounts=Credit adjustment-Credit balance before adjustment
Let plug in the formula
Allowance for uncollectible accounts= $16,500-$2,900
Allowance for uncollectible accounts=$13,600
3. Calculation for the net realizable value of accounts receivable.
Net realizable value
Accounts Receivable $136,000
Add Allowance for Uncollectible Accounts
$2,900
Less Bad debt expense(16,500)
Net realizable value$122,400
Therefore the Net realizable value is $122,400
