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Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
Edition 9ISBN: 0073527068Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
Edition 9ISBN: 0073527068Analysis of accounts receivable and allowance for bad debts—determine ending balances A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here:
Accounts receivable | $63,000 |
|
Less: Allowance for bad debts | (9,000) | $54,000 |
The company’s accounting records revealed the following information for the year ended December 31, 2011:
Sales (all on account) | $480,000 |
Cash collections from customers | 435,000 |
Accounts written off | 10,500 |
Bad debts expense (accrued at 12/31/11) | 16,500 |
Required:
Calculate the net realizable value of accounts receivable at December 31, 2011, 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 Allowancefor Bad Debts accounts.)
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Step 1 of 3
Analysis of accounts receivable – Allowance for bad debts – Determine beginning balances:
The computation of the net realizable value for accounts receivable is as follows:
Step 2 of 3
Step 3 of 3
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