Question

The following information relates to Jay Co.’s accounts receivable for the year just ended: Accounts receivable, 1/1 $ 650,000 Credit sales for the year 2,700,000 Sales returns for the year 75,000 Accounts written off during the year 40,000 Collections from customers during the year 2,150,000 Estimated uncollectible accounts at 12/31 110,000 What amount should Jay report for accounts receivable, before allowance for uncollectible accounts, at December 31?

Answer 1

Answer:

Gross A/R 1,085,000

Allowance   (110,000)  

Net A/R       975,000

Explanation:

Before allowance for uncollectible accounts:

This means we are asked for the gross accounts receivable:

beginning A/R + net credit sales - collection - write-off accounts:

650,000 + (2,700,000 - 75,000) - 2,150,000 - 40,000 =  1,085,000

Gross A/R 1,085,000

Allowance   (110,000)  

Net A/R       975,000