Question

At January 1,2019, Towing Company reported an allowance for bad debts with a $4,300
credit balance. At December 31, 2019, Towing Company prepared the following aging
schedule:

                     Accounts Receivable      % Uncollectible
not past due            $135,000                     3%
1-30 days past due        42,000                     7%
31-60 days past due       28,000                    11%
61-90 days past due       15,000                    16%
over 90 days past due      4,000                    45%

Based on the above information, Towing Company reported bad debt expense of $11,600
for 2019. 

Calculate the net realizable value of Towing's accounts receivable at December 31, 2019.

Answer 1

Net Realizable value is the difference between Account Receivable and Allowance for doubtful accounts.

Now closing balance of account receivable is 157,000

Closing balance of allowance for doubtful accounts is $14,270

So net realizable value is $142,730

Age Group	Balance	Probability of	Amount uncollectible
		Noncollection
Not past due	$ 135,000	3%	4,050
1-30 days past due	42,000	7%	2,940
31-60 days past due	28,000	11%	3,080
61-90 days past due	15,000	16%	2,400
Over 90 days past due	4,000	45%	1,800
	$ 157,000		$ 14,270