Question

g Required information Skip to question [The following information applies to the questions displayed below.] The following events occur for The Underwood Corporation during 2021 and 2022, its first two years of operations. June 12, 2021 Provide services to customers on account for $32,000. September 17, 2021 Receive $17,500 from customers on account. December 31, 2021 Estimate that 45% of accounts receivable at the end of the year will not be received. March 4, 2022 Provide services to customers on account for $47,000. May 20, 2022 Receive $10,000 from customers for services provided in 2021. July 2, 2022 Write off the remaining amounts owed from services provided in 2021. October 19, 2022 Receive $37,500 from customers for services provided in 2022. December 31, 2022 Estimate that 45% of accounts receivable at the end of the year will not be received. 3. Calculate net accounts receivable at the end of 2021 and 2022.

Answer 1

Answer:

The Underwood Corporation

Net Accounts Receivable:

2021 = $7,975 ($14,500 - $6,525)

2022: = $3,200 ($9,500 - $6,300)

Explanation:

a) Data and Calculations:

Accounts Receivable during year 2021 = $32,000

September 17, 2021 Cash received            (17,500)

December 31, 2021 Balance =                   $14,500

March 4, 2022 Services on account =       47,000

May 20, 2022 Cash received                    (10,000)

Bad Debts written off                                   (4,500)

October 19, 2022 Cash received              (37,500)

December 31, 2022 Balance =                   $9,500

Allowance for Doubtful Accounts

December 31, 2021  = $6,525 ($14,500 * 45%)

Bad Debts written off   (4,500)

December 31, 2022 = $4,275 ($9,500 * 45%)

December 31 Balance $6,300

b) The net accounts receivable is equal to the Balance of the Accounts Receivable minus the Allowance for Doubtful Accounts (all at December 31) for each year.