Using this new information and the balance sheet approach, what the appropriate net realizable value of accounts receivable?

Sales	800,000
Expenses	608,000
Bad debt expense	40,000
Pretax income	152,000
Tax expense (30%)	45,600
Net income	106,400

 

Accounts receivable	96,000
Allowance for doubtful accounts (credit balance)	(1,900)
Net realizable value	94,100

 

You are the auditor for Lego Company. The company uses the balance sheet approach for determining bad debt expense. You believe the net realizable value amount above is not appropriate.

You gathered more detailed uncollectibility percentages based on the length of time accounts receivable has been outstanding (see below).

 

	Accounts Receivable	Percent Uncollectible
Under 31 days	49,000	2%
31-60 days	29,800	10%
61-90 days	9,600	30%
Over 90 days	7,600	40%
	96,000

 

Answer rating: 100% (QA)

solution Estimated Amoont Age of Accounts ... View the full answer