Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31,
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the companys fiscal year-end. The 2020 balance sheet disclosed the following: Current Assets: Receivables (net of allowance for uncollectible accounts of $49,000): $527,000 During 2021, cash sales were $1,845,000, cash collections from customers $1,945,000, and $58,000 in accounts receivable were written off. In addition, $4,900 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021 revealed the following: Age Group % of YE Receivables in Group % Uncollectible 0 60 days 60% 3% 61 90 days 10% 5% 91 120 days 20% 25% Over 120 days 10% 45% Bad Debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is determined by an aging of A/R.
Question: What would be the net amount of A/R reported on the 2021 balance sheet?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started