Arizona Company reported accounts receivable of $21,200,000 at the end of its 20

Question

Arizona Company reported accounts receivable of $21,200,000 at the end of its 2009 fiscal year. This amount was net of an allowance for doubtful accounts of $1,456,000. During 2010, Georgia sold $72,300,400 of merchandise on credit. It collected $48,520,555 from customers. Accounts valud at $2,125,000 were written off as uncollectible during 2010. Arizona's management estimates that 8% of the year-end accounts receivable balance wiill be uncollectible.

a. What amount will Arizona report for accounts receivable? Show computations.
b. What is the balance for the allowance for doubtful accounts at the end of 2010? (round to whole numbers) Show computations.
c. What is the doubtful accounts expense or 2010? Show computations.

Explanation / Answer

a) Amount in $

2009 Opening balance 21,200,000
Add: Credit sales 72,300,400
Less: Cash collected 48,520,555
Less: Bad debt   2,125,000
Closing balance (a) 42,854,845

Less: Allowance for doubtful accounts (a*8%) 3,428,388
Closing Accounts receivable 39,426,457

c)

Allowance for doubtful accounts for 2010 $ 3,428,388

b) Allowance for doubtful accounts at the end of 2010

Opening balance : 1,456,000

Less:Bad debt 2,125,000

Add: During 2010 3,428,388

Closing balance 2,759,388

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