Prior to the Year-End Adjustment to Record Bad Debt Expense

Essay

Prior to the year-end adjustment to record bad debt expense for 2016 the general ledger of Stickler Company included the following accounts and balances: Cash collections on accounts receivable during 2016 amounted to $450,000. Sales revenue during 2016 amounted to $800,000, of which 75% was on credit, and it was estimated that 2% of these credit sales made in 2016 would ultimately become uncollectible.
Required:
A.Calculate the bad debt expense for 2016.
B.Determine the adjusted 2016 year-end balance of the allowance for doubtful accounts.
C.Determine the net realizable value of accounts receivable for the December 31, 2016 balance sheet.