Vance Refrigeration Inc. had gross accounts receivable of $150,000 at January 1,

ID: 2566260 • Letter: V

Question

Vance Refrigeration Inc. had gross accounts receivable of $150,000 at January 1, 2017. Vance recorded the following in 2017:

Credit sales of $200,000;

Bad debt expense of $35,000;

Cash collections of $100,000 related to customer sales made on credit in 2010; and

A write-off of a 2010 account of $15,000 after deciding that the amount would never be collected.

What is Vance’s gross accounts receivable at December 31, 2017?

(A) $200,000.

(B) $215,000.

(D) $250,000

The answer is C, but please explain why

Let us make a T account for accounts receivable:-

Required answer is Option C.

Bad debt exp. of $ 35000 will affect Bad debt expense account and allowance for doubtful debts account.

Opening bal. 150000 Cash collections 100000 Credit sales 200000 write-off 15,000 Closing bal. 235000 350000 350000

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