At January 1, 2013, Betty DeRose, Inc. had an allowance for doubtful accounts wi

Question

At January 1, 2013, Betty DeRose, Inc. had an allowance for doubtful accounts with a $3,900 credit balance. During 2013, Betty recovered $2,000 from customer* that had been written off in previous years. At December 31, 2013, Betty prepared the following aging schodulo: nasod on the above aging schodulo, notty tx>>Ro>>o nstimatod Its bad debt expense to be $6,610 for 2013. Calculate the net realiable value of Botty's accounts receivable at December 31, 2013. Do not use dec lira Is in your answer.

Explanation / Answer

Total opening credit in allowance for doubtful debts is $3,900 of which $2,000 got collected . So allowance in books stands at $ 1,900.

Baddebts expenses for the year is $8,610 which after recovery of earlier period written off receivables, so gross expnses is 8,610+2,000 = 10,610

Closing allowance must be allowance in books 1,900 + expenses for the year before recovery of earlier period allowance recovered (8,610 +2,000) 10,610 = 12,510

allowance excluding 61-90 is 10,550

allowance pertaining to 61-90 is 12,510-10,550 = 1,960

Receivables relating to 61-90 is 1,960/12% =16,333.33

Total Receivables is 224,333.33

Particulars Accounts Receivable % Uncollectible Uncollectible value not past due                               120,000 2                              2,400 1-30 days                                  48,000 5                              2,400 31-60 days                                  25,000 8                              2,000 61-90 days ? 12 >90 days                                  15,000 25                              3,750

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