Warner Company had $400,000 in credit sales for 2013, and it estimated that 2% of the credit sales would not be collected. The balance in Accounts Receivable at the end of the year was $76,000. Warnock had never used the allowance method to account for its receivables till 2013. The net realizable value of its accounts receivable at the end of the year was $68,000.

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$400,000 x 2% = $8,000 uncollectible accounts expense (increase to allowance for doubtful accounts); $76,000 accounts receivable - $8,000 allowance for doubtful accounts = $68,000 net realizable value

Warner Company Had $400,000 in Credit Sales for 2013, and It