AT&U Company
Data for the year ended December 31, Year 1, are presented below:
$\begin{array}{llr}
\text { Sales (credit)} &\$2,500,000\
\text { Sales returns and allowances } &50,000\
\text { Accounts receivable (December 31, Year 1) } &640,000\
\text { Allowance for doubtful accounts} &\
\text { (before adjustment at December 31, Year 1) } &20,000\
\text {Estimated amount of uncollected accounts based on aging analysis } &45,000\
\end{array}$

-Refer to the figure AT&U Company.If the company 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

AT&U Company
Data for the year ended December 31, Year 1, are presented below:
 $\begin{array}{llr}
  \text {  Sales (credit)} &\$2,500,000\
 \text { Sales returns and allowances } &50,000\
 \text { Accounts receivable (December 31, Year 1) } &640,000\
 \text {  Allowance for doubtful accounts} &\
 \text { (before adjustment at December 31, Year 1) } &20,000\
 \text {Estimated amount of uncollected accounts based on aging analysis  } &45,000\
\end{array}$

-Refer to the figure AT&U Company.If the company 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 the company expects to collect. This is calculated by subtracting the estimated amount of uncollected accounts from the accounts receivable balance. In this case, the accounts receivable balance is $640,000 and the estimated amount of uncollected accounts is $45,000. Therefore, the net realizable value of accounts receivable is $640,000 - $45,000 = $595,000.

AT&U Company Data for the Year Ended December 31, Year

AT&U Company
Data for the Year Ended December 31, Year