Question $6$

On December $31,$ Crane and Co $($a calendar year end corporation$)$ reports an

ending balance in accounts receivable $($before any adjustments$)$ of $$125,000,$ and

total credit sales of $$1,400,000$ for the year ended December $31,2023.$ Crane

and Co uses the allowance method to account for uncollectible accounts.

Assume Allowance for Doubtful Accounts has an unadjusted balance of negative

$($$$1,200),$ and bad debts are assumed to be $0\mathrm{.}75\%$ of credit sales. Compute the

net realizable value of accounts receivable $($after all adjustments$)$ on December

$31$ assuming that Crane and Co uses the Percentage of Sales Method to

estimate uncollectible accounts.

Note: when recorded in the framework, the Allowance for Doubtful

Accounts appears as a negative number. This is because the Allowance

for Doubtful Accounts is a contra asset that reduces Accounts Receivable.