The December 31, 2020 statement of financial position for Debrose Limited had Accounts Receivable of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000. During 2021 the following transactions occurred: service revenue billed on account, $1,500,000; collections from customers, $1,300,000; accounts written off $37,000; previously written off accounts of $4,000 were collected.
Instructions
a) Record the 2021 transactions.
b) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of accounts receivable, what is the adjusting entry at December 31, 2020? HINT: Use a T account to track account balances for A/R and ADA.
c) What is the net realizable value of the accounts receivable on December 31, 2020?

Question

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The Answer of The December 31, 2020 statement of financial position for Debrose Limited had Accounts Receivable of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000. During 2021 the following transactions occurred: service revenue billed on account, $1,500,000; collections from customers, $1,300,000; accounts written off $37,000; previously written off accounts of $4,000 were collected.
Instructions
a) Record the 2021 transactions.
b) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of accounts receivable, what is the adjusting entry at December 31, 2020? HINT: Use a T account to track account balances for A/R and ADA.
c) What is the net realizable value of the accounts receivable on December 31, 2020?

The December 31, 2020 Statement of Financial Position for Debrose