Question

# 1. Company had the following balances in their accounts at 1/1/16: Accounts receivable??\$46,900 AFDA????\$2,700 During 2016...

1. Company had the following balances in their accounts at 1/1/16:

Accounts receivable??\$46,900

AFDA????\$2,700

During 2016 the following occurred:

1. Sales on account???\$179,000
2. Collections of Receivables??\$194,000
3. Write-off of uncollectible accounts?\$900?
4. Estimate of uncollectible accounts?7%

What is the company’s uncollectible expenses for 2016?

What is the net realizable value of receivables at 12/31/16?

Solution: Uncollectible Expense for 2016:

Ending Account receivable = beginning accounts receivable + Sales on account - Collection of receivable - write off of uncollectible accounts

= \$46900 +\$179000 - \$194000 - 900 = \$31,000

Ending balance of AFDA= 7% of ending Account receivable = \$31000*7% = \$2,170

Uncollectible expense for 2016 = Ending AFDA + write off of Uncollectible accounts - Beginning AFDA

= \$2170 + \$900 - \$2700= \$370

Solution: Net Realizable value of receivables at 12/31/2016

Net Realizable value of receivables at 12/31/2016 = Ending Accounts receivable - Ending AFDA = \$31000- \$2170 = \$28,830