Collision Corporation
Data for Collision Corporation for the year ended December 31, 2012, are presented below.
Credit Sales $~~~~~~$ $ \$ 2,000,000 $
Sales retuns and allowances $~~~~~~$ 40,000
Accounts receivable (December 31, 2012) $~~~~~~$ 610,000
Allowance for bad debts
$~~$(Before adjustment at December 31, 2012) $~~~~~~$ 15,000
Estimated amount of uncollected accounts based on aging analysis $~~~~~~$ 55,000
-Refer to the information provided for Collision Corporation. If Collision uses the aging of accounts receivable approach to estimate its bad debts, what will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?

Question

Collision Corporation 
Data for Collision Corporation for the year ended December 31, 2012, are presented below.
Credit Sales $~~~~~~$ $ \$ 2,000,000 $
Sales retuns and allowances $~~~~~~$ 40,000
Accounts receivable (December 31, 2012) $~~~~~~$ 610,000
Allowance for bad debts
$~~$(Before adjustment at December 31, 2012) $~~~~~~$ 15,000
Estimated amount of uncollected accounts based on aging analysis $~~~~~~$ 55,000 
-Refer to the information provided for Collision Corporation. If Collision uses the aging of accounts receivable approach to estimate its bad debts, what will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?

Quizplus · Accepted Answer

The net realizable value of accounts receivable is the amount of accounts receivable that is expected to be collected. This is calculated by subtracting the estimated amount of uncollected accounts from the accounts receivable balance. In this case, the accounts receivable balance is $610,000 and the estimated amount of uncollected accounts is $55,000. Therefore, the net realizable value of accounts receivable is $610,000 - $55,000 = $555,000.

Collision Corporation Data for Collision Corporation for the Year ~~~~~~

Collision Corporation
Data for Collision Corporation for the Year $~~~~~~$