Physicians' Hospital has the following balances on December 31, 2015, before any adjustment: Accounts Receivable = $48,000; Allowance for Uncollectible Accounts = $1,000 (credit). On December 31, 2015, Physicians' estimates uncollectible accounts to be 20% of accounts receivable.

Exercise 5-8 Record the adjustment for uncollectible accounts and calculate net realizable value (LO3)

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Physicians' Hospital has the following balances on December 31, 2015, before any adjustment: Accounts Receivable = $48,000; Allowance for Uncollectible Accounts = $1,000 (credit). On December 31, 2015, Physicians' estimates uncollectible accounts to be 20% of accounts receivable. Required: 1. Record the adjustment for uncollectible accounts on December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Explanation: 1. Bad debt expense: ($48,000 × 20%) – $1,000 = $8,600. 2. Determine the amount at which bad debt expense is reported in the income statement and the allowance for uncollectible accounts is reported in the balance sheet. Explanation: 2. Allowance for uncollectible accounts: $9,600 = $8,600 credit adjustment + $1,000 credit balance before adjustment