Shelton Company has the following account balances at year-end: Shelton should report accounts receivable at a net amount of

Question

Shelton Company has the following account balances at year-end:  Shelton should report accounts receivable at a net amount of

Quizplus · Accepted Answer

To report accounts receivable at a net amount, we need to deduct the allowance for doubtful accounts from the total accounts receivable balance. The allowance for doubtful accounts is calculated as a percentage of the accounts receivable balance based on historical experience and current economic conditions. In this case, the allowance is calculated as 8% of $120,000 ($9,600). Therefore, the net amount of accounts receivable is $112,800 ($120,000 - $9,600).

Shelton Company Has the Following Account Balances at Year-End