Boulder Company had a $75,000 beginning balance in Accounts Receivable and a $3,000 balance in the Allowance for Uncollectible Accounts. During the year, credit sales were $300,000 and customers' accounts collected were $295,000. Also, $2,000 in worthless accounts were written off.
What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for uncollectible accounts?

Question

Quizplus · Accepted Answer

The ending balance in Accounts Receivable is calculated as follows: Beginning balance ($75,000) + Credit sales ($300,000) - Collections ($295,000) - Write-offs ($2,000) = $78,000. The net amount of receivables before any provision for uncollectible accounts is $78,000. However, the question asks for the net amount before any provision, so the Allowance for Uncollectible Accounts is not subtracted, resulting in $77,000.

Boulder Company Had a $75,000 Beginning Balance in Accounts Receivable