A portion of the current assets section of the December 31, 2013, balance sheet

Question

A portion of the current assets section of the December 31, 2013, balance sheet for Gibbs Co. is presented here:

(2,600

The company's accounting records revealed the following information for the year ended December 31, 2014:

Calculate the net realizable value of accounts receivable at December 31, 2014, and prepare the appropriate balance sheet presentation for Gibbs Co., as of that point in time. (Hint: Use T-accounts to analyze the Accounts Receivable and Allowance for Bad Debts accounts.) (Amounts to be deducted should be indicated with minus sign.)

Account Rece

Less: Allowance for bad Debts

A portion of the current assets section of the December 31, 2013, balance sheet for Gibbs Co. is presented here:

Explanation / Answer

Solution.

Accounts recievable............23,500
Debit A/R 23,500
Less: Allowance for bad debts......(2,600) $20900
Credit Allowance for 2,600
The companys accounting records showing the following information for the year ended December 31,2011:
sales (on all accounts)......156,500
Debit A/R for 156,500
Cash collections from customers......148,500
Credit A/R for 148,500
Accounts written off.............3,500
Debit Allowance for 3,500
Credit A/R for 3,500
Bad Debts expense (accrued 12/31/11)........6,000
Credit Allowance for 6,000

After the amounts are put into the T accounts, you should see that you have a debit balance of 28,000 in Accounts Receivable and a credit balance of 5,100 in Allowance for Doubtful Accounts. That leaves a net realizable value of 22,900 (28,000 - 5,100)

Balance sheet presentation would just be:

Accounts Receivable. . . . . . . . . . . . . . .28,000
Less:
. .Allowance for Doubtful Accounts. . . . . 5,100
. . .Net Realizable Value. . . . . . . . . . . . .22,900

Accounts recievable. Particular Amount Particular Amount                               23,500               148,500                            156,500                    3,500 Balance                  28,000                            180,000               180,000 Allowance for bad debts Particular Amount Particular Amount                                 3,500                    2,600                    6,000 Balance                                 5,100                                 8,600                    8,600

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