Becky had net sales (all on account) in 2014 of $600,000. At December 31, 2013, before adjusting entries, the balances in selected accounts were: accounts receivable $750,000 debit, and allowance for doubtful accounts $1,500 debit. Becky estimates that 3% of its net sales will prove to be uncollectible. What is the net realizable value of the receivables reported on the financial statements at December 31, 2014?

Question

Quizplus · Accepted Answer

Firstly, we need to calculate the allowance for doubtful accounts at December 31, 2014. 3% of net sales of $600,000 is $18,000.
Allowance for doubtful accounts at December 31, 2014 = 1,500 + 18,000 = $19,500
Net realizable value of accounts receivable at December 31, 2014 = Accounts receivable - Allowance for doubtful accounts
= 750,000 - 19,500
= $733,500

Becky Had Net Sales (All on Account) in 2014 of $600,000