Question

Becky had net sales (all on account) in 2017 of 8,000,000. At December 31, 2017, before adjusting entries, the balances in selected accounts were: account receivable 1,000,000 debit, and allowance for doubtful accounts 2000 credit. Becky estimates that 4% of its account receivable will prove to be uncollectible. What is the net realizable value of the receivables reported on the financial statements at December 31, 2017?

Answer 1

Account Receivable	1,000,000
Estimated uncollectibles	4%
Estimated uncollectibles	40,000
Balance in Provision	(2,000)
Additional provision required	38,000
So Net realizable receivables	Account receivable less provision for doubtful debt
So Net realizable receivables	=1000000-40000
So Net realizable receivables	960,000.00