At December 31 (before adjusting journal entries), the Allowance for Doubtful Accounts of a company showed...
At December 31 (before adjusting journal entries), the Allowance for Doubtful Accounts of a company showed a credit balance of $1,400 and the Accounts Receivable account showed a balance of $88,000. An aging of the accounts receivable indicated that the amount expected to be uncollectible was $2,200. The accountant also does a calculation based on the company’s net credit sales and determines an alternate estimate of bad debt based on those net sales would show $1,900 uncollectible. If the accountant chooses to use the Balance Sheet Method of estimating bad debt, the net realizable value of accounts receivable after the adjustment would be:
Group of answer choices
a. $85,200
b. $86,100
c. $85,800
d. $84,700
e. $84,400
Homework Answers
Solution: 85,800
Working:
Accounts receivable balance 88000
Minus: Estimated ending balance of Allowance for DA
2200
Net realizable value 85800
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