Explore BrainMass

Explore BrainMass

    Net Realizable Value of A/R and Allowance for Bad Debts

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here:

    Accounts receivable $ 23,400
    Less: Allowance for bad debts (2,500) $ 20,900

    --------------------------------------------------------------------------------

    The company's accounting records revealed the following information for the year ended December 31, 2011:

    Sales (all on account) $ 151,500
    Cash collections from customers 154,500
    Accounts written off 2,700
    Bad debts expense (accrued at 12/31/11) 5,900

    --------------------------------------------------------------------------------

    Required:
    Calculate the net realizable value of accounts receivable at December 31, 2011, and allowance for bad debts for Gibbs Co., as of that point in time. (Hint: Use T-accounts to analyze the Accounts Receivable and Allowance for Bad Debts accounts.) (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

    At December 31, 2011:
    Accounts receivable $
    Less: Allowance for bad debts $

    © BrainMass Inc. brainmass.com June 4, 2020, 1:33 am ad1c9bdddf
    https://brainmass.com/business/auditing/net-realizable-value-of-a-r-and-allowance-for-bad-debts-407249

    Solution Summary

    Using T-accounts, this solution illustrates how to compute the net realizable value of a company's accounts receivable and its allowance for doubtful accounts.

    $2.19

    ADVERTISEMENT