Question

John Den Bear Company had a $150,000 beginning balance in Accounts Receivable and a $6,000 credit balance in the Allowance for Doubtful Accounts. During the year, credit sales were $600,000 and customers’ accounts collected were $590,000. Also, $4,000 in worthless accounts were written off. What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for doubtful accounts?

Answer 1

Answer:

$154,000

Explanation:

John Den Bear Company had a $150,000 beginning balance in Accounts Receivable and a $6,000 credit balance in the Allowance for Doubtful Accounts. During the year, credit sales were $600,000 and customers’ accounts collected were $590,000. Also, $4,000 in worthless accounts were written off. What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for doubtful account

Ending balance of accounts receivable = Beginning balance + credit sales - customers’ accounts collected - write off amount

Accounts receivable, beginning.      $150,000

Add: Credit sales                              600,000

Less: Collections on receivables      (590,000)

Less: written of account                     (4000)

                                                           = $156,000

Balance at the end= Beginning balance - write off amount

= $6,000 - $4,000

= $2,000

net amount of receivables is calculated as

= Ending balance of accounts receivable - ending balance of allowance for Doubtful Accounts

= $156,000 - $2,000

= $154,000

Answer 2

Answer:

The net amount of receivables is $154,000

Explanation:

For computing the  net amount of receivables, first ,we have to compute the ending balance of accounts receivable and ending balance of allowance for Doubtful Accounts which is shown below:

Ending balance of accounts receivable = Beginning balance + credit sales - customers’ accounts collected - write off amount

= $150,000 + $600,000 - $590,000 - $4,000

= $156,000

And, the ending balance of allowance for Doubtful Accounts equal to

= Beginning balance - write off amount

= $6,000 - $4,000

= $2,000

Now the net amount of receivables equal to

= Ending balance of accounts receivable - ending balance of allowance for Doubtful Accounts

= $156,000 - $2,000

= $154,000