Question

The Waking Dead Co provides services for both cash and on account The accounts are adjusted monthly, For September, the folowing information is available Accounts Receivable on September 1st is $22,400 Allowance for Doubtful Accounts on September 1st is $4,400 Services provided during September for cash $20,000 Services provided during September on account $45,000 During the month collections on account were $34,400 and accounts wrilten off as bad debts were $2.000 The Walking Dead essmates bad detes at อ% of credt sales Do not use the dollar sign or a decimal in your answer. Commas are ok. What is the September 30th net realzable value of Accounts Recelvable?

Answer 1

Answer:

$25,000

Explanation:

Given that,

Accounts receivable:

Beginning balance 1 September = $22,400

Services on account = $45,000

Cash collected = $34,400

Written off accounts = $2,000

Allowance For Doubtful accounts:

Beginning balance 1 September = $4,400

Adjusted balance for Accounts receivables on 30 Sept ember:

= Beginning balance 1 September + Services on account - Cash collected - Written off accounts

= $22,400 + $45,000 - $34,400 - $2,000

= $31,000

Adjusted balance for Allowance For Doubtful accounts on 30 Sept ember:

= Beginning balance 1 September - Written off accounts + Bad Debt Expense

= $4,400 - $2,000 + ($45,000 × 8%)

= $4,400 - $2,000 + $3,600

= $6,000

Therefore, the September 30th net realizable value of Accounts Receivable is calculated as follows:

= Accounts receivables – Allowance for Doubtful accounts

= $31,000 - $6,000

= $25,000