As of December 31, 2012, SPK Inc reported the following information on its balance sheet: Accounts receivable
Question:
As of December 31, 2012, SPK Inc reported the following information on its balance sheet:
Accounts receivable 900,000
Provision for doubtful accounts 54,000 (credit)
During 2013, the company had the following transactions related to accounts receivable:
Sales on Account 3,000,000
Collections on Account 2,850,000
Write-offs for uncollectible accounts 60,000
Recovery of accounts previously penalized 12,000
Required
A) Assuming that bad debts are estimated at 5% of accounts receivable at the end of the year, determine the net realizable value (after adjustments) of accounts receivable.
B) If the insolvency is estimated at 1.5% of credit sales, determine the final balance in the Provision for doubtful accounts after adjustment.
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso