Alberta's Appliances is a wholesaler that sells to retail stores on credit.Alberta's sales for the year were $250,000.During the year,it received payments of $220,000 from customers.At year-end,it establishes an allowance for uncollectible accounts equal to 5% of the unpaid receivables.How much should Alberta's report as net accounts receivable at December 31?
A)$30,000
B)$28,500
C)$12,500
D)$11,000

Question

Quizplus · Accepted Answer

The net accounts receivable at December 31 is calculated as:

Total accounts receivable - Allowance for uncollectible accounts

Total accounts receivable = Sales on credit - Payments received

Sales on credit = $250,000 
Payments received = $220,000

Total accounts receivable = $250,000 - $220,000 = $30,000

Allowance for uncollectible accounts = 5% of the unpaid receivables = 5% of ($30,000 - $220,000) = $1,500

Net accounts receivable = $30,000 - $1,500 = $28,500

Therefore, the best choice is B, $28,500.

Alberta's Appliances Is a Wholesaler That Sells to Retail Stores