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What is the net realizable value of the accounts receivable

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Reference no: EM132894897

Problem - The December 31, 2020 statement of financial position for Debrose Limited had Accounts Receivable of $475,000 and a credit balance in Allowance for Doubtful Accounts of $45,000. During 2021 the following transactions occurred: service revenue billed on account, $1,500,000; collections from customers, $1,300,000; accounts written off $37,000; previously written off accounts of $4,000 were collected.

Instructions -

a) Record the 2021 transactions.

b) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of accounts receivable, what is the adjusting entry at December 31, 2021? HINT: Use a T account to track account balances for A/R and ADA.

c) What is the net realizable value of the accounts receivable on December 31, 2021?

Reference no: EM132894897

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