Company uses allowance method of accounting for uncollectible accounts. 12/31/20

Question

Company uses allowance method of accounting for uncollectible accounts.
12/31/2009
Accounts receivable
100,000
debit balance
Allowance for doubtful accounts
6,000
credit balance
During 2010, the following sales transactions occurred:
Credit sales of $800,00
Collections of $750,000
A customer balance of $1,000 is determined to be uncollectible.
An amount previously written off ($350) was received.
Based on prior experience, the company estimates that 5% of the AR balance at 12/31/10
is uncollectible.
Prepare the entries to record the receivables transactions;
Calculate the net realizable value of accounts receivable at 12/31/10

Explanation / Answer

A/R 800,000 Revenue 800,000 Cash 750,000 A/R 750,000 Allowance for Doubtful Accounts 1,000 AR 1,000 AR 350 Allowance for Doubtful Accounts 350 Cash 350 AR 350 Bad debt expense 2,100 Allowance for Doubtful Accounts 2,100 Cash realizable value (149,000-7,450) = 141,550

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