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?

Business   Accounting   
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Answer #1

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

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