At the end of the current year, accounts receivable has a balance of $550,000; allowance for doubtful accounts has a credit balance of $5,500; and sales for the year total $2,500,000. an analysis of receivables estimates uncollectible receivables as $25,000. determine the amount of the adjusting entry for bad debt expense and the adjusted balance of allowance for doubtful accounts, respectively.

Amount of Adjusting Entry for Bad Debts  

Estimated uncollected Receivables                             $25,000.00

Less: Existing Provision                                                  $5,500.00

Adjusting Amt. for Bad Debts                                        $19,500.00

Adjusted Balance of  

Accounts Receivables                                                    $550,000.00

Allowance for Doubtful Accounts                                  $25,000.00

Bad Debts expense                                                       $19,500.00

Net Realizable Value of Accounts Receivables  

Accounts Receivables                                                    $550,000.00

Less: Allowance for Doubtful Accounts                       (-$25,000.00)

Net Realizable Value                                                     $525,000.00

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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