Question

At January 1, 2023, Vy6r3 Company had accounts receivable of $220,000 and an allowance for doubtful accounts with a $15,000 credit balance.

During 2021, Vy6r3 Company reported the following information: Write-offs of uncollectible accounts ................ $ 39,260

Cash collections from credit customers .............. $165,210

Net credit sales .................................... $363,560

Recoveries of previously written-off accounts ....... $ 13,640

Vy6r3 Company estimates bad debt expense using the net credit sales method and has estimated that 5% of its net credit sales will be uncollectible. Calculate Vy6r3 Company's net realizable value at December 31, 2021.

Answer 1

Net Realizable Value

$ 362,532

Explanation:

1) Account Receivable:

Beginning Balance	$ 220,000
Less: Write off	($39,260)
Less: collection	( $ 165,210)
Add: Credit Sales	363,560
Account Receivable Ending Balance	$ 379,090

2) Allowance For Doubtful Accounts:

Allowance for Doubtful Accounts

Particular	Amount	Particular	Amount
		Beg. Bal.	$15000
Wrhte off	$ 39,260	Recovery	$13,640
		Bad Debt Exp	$18,178
		Ending Balance	$ 7558

Bad Debt Exp:

( $ 363, 560 × 5% = $ 18,178)

3) Net Realizable Value:

Account Receivable	$ 370,090
Less: Allowance For Doubtful Accoumt	( $7558)
Net Receivable value	$ 362,532