At the beginning of 2011, Darcys Floor Coverings had the following account balances: accounts receivable, $325,000 and

Question:

At the beginning of 2011, Darcy’s Floor Coverings had the following account balances: accounts receivable, $325,000 and allowance for uncollectible accounts, $(7,500). During the year, net credit sales were $793,250 and $10,000 of specific customer accounts were written off. Cash collections amounted to $1,000,000. At year end, Darcy’s estimated that 1% of net credit sales were uncollectible.

1. Record the transactions (including beginning balances) into the accounting equation for 2011.

2. What is the net realizable value of accounts receivable at year end?

3. What amount of bad debts expense will appear on the income statement for the year ended December 31, 2011?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...