Solution-Compute the net realizable value of accounts

Compute the net realizable value of accounts receivable

Reference no: EM132468063

Question - Richards Company uses the allowance method of accounting for bad debts. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current year.

No. of Days Outstanding	Amount	Probability of Collection
0-30 days	$500,000	.98
31-60 days	200,000	.90
Over 60 days	100,000	.80

The following additional information is available for the current year:

Net credit sales for the year $4,000,000

Allowance for Doubtful Accounts:

Balance, January 1 45,000

Balance before adjustment, December 31 2,000

Required - If Richards determines bad debt expense using 1.5 percent of net credit sales, compute the net realizable value of accounts receivable on the December 31 balance sheet.

a. $738,000.

b. $740,000.

c. $742,000.

d. $750,000.

Reference no: EM132468063

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Compute the net realizable value of accounts receivable

Reference no: EM132468063

Reference no: EM132468063

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