Question

The Physical Therapy Center specializes in helping patients regain motor skills after serious accidents. The center has the following balances on December 31, 2018, before any adjustment: Accounts Receivable = $110,000; Allowance for Uncollectible Accounts =$4,000 (debit). The center estimates uncollectible accounts based on an aging of accounts receivable as shown below.
\begin{matrix} \text{Age Group} & \text{Amount Receivable} & \text{Estimated Percent Uncollectible}\\ \hline \text{Not yet due} & \text{$\$ 60,000$} & \text{4$\\\%$}\\ \text{$0-60$ days past due} & \text{$26,000$} & \text{20$\\\%$}\\ \text{$61-120$ days past due} & \text{$16,000$} & \text{30$\\\%$}\\ \text{More than 120 days past due} & \underline{8,000} & \text{85$\\\%$}\\ \text{Total} & \underline{\underline{\$ 110,000}} & \text{ }\\ \end{matrix}
Age Group
Not yet due
0−60 days past due
61−120 days past due
More than 120 days past due
Total
​

Amount Receivable
$60,000
26,000
16,000
8,000
​

$110,000
​

​

​

Estimated Percent Uncollectible
4%
20%
30%
85%

​

​


Estimate the amount of uncollectible receivables. 2. Record the adjustment for uncollectible accounts on December 31, 2018. 3. Calculate the net realizable value of accounts receivable.

Answer 1

The Physical Therapy Center has Accounts Receivable = $110,000 on December 31, 2018.

What does Physical therapy means?

Physical therapy is a type of health care in which physical impairments, functional limitations, and disability are identified, diagnosed, and treated. It is intended to aid in the improvement of mobility, the reduction of pain, the restoration of function, and the prevention of disability. Physical therapists, physical therapist assistants, and physical therapy aides provide physical therapy.

Estimate the amount of uncollectible receivables:

Not yet due: $60,000 x 4% = $2,400

0-60 days past due: $26,000 x 20% = $5,200

61-120 days past due: $16,000 x 30% = $4,800

More than 120 days past due: $8,000 x 85% = $6,800

Total estimated uncollectible receivables = $19,200

Record the adjustment for uncollectible accounts on December 31, 2018:

Debit Allowance for Uncollectible Accounts: $19,200

Credit Accounts Receivable: $19,200

Calculate the net realizable value of accounts receivable:

Net realizable value of accounts receivable = Accounts Receivable - Allowance for Uncollectible Accounts

Net realizable value of accounts receivable = $110,000 - $19,200 = $90,800

To know more about Physical therapy,

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