Question

On December 31, 2021, the end of Larry's Used Cars' first year of operations, the accounts receivable was $53,600. The company estimates that $1,200 of the year-end receivables will not be collected. Accounts receivable in the 2021 balance sheet will be valued at:

Answer 1

Answer:

In the balance sheet the firm will disclosure the Account receivables for his net value that is after reducing the expected uncollectible amounts

The net A/r will be of 52,400

Explanation:

he company will do an adjusting entry to create a contra-asset account to represent the net amount of receivables:

bad debt expense 1,200 debit

    allowance for doubful expense 1,200 credit

Now, it will use the allowance account to reduce the account receivables balance:

accounts receivables    53,600

allowance                       (1,200)  

net                                   52,400