The Blue Pub provides catering services to local businesses The following information was available for The Blue Pub for the years ended December 31, 2019 and 2020 December 31, 2019 December 31, 2020 Cash $ 1,880 $ 1,700 Accounts receivable 46,500 Allowance for doubtful accounts 600 Other current assets 8,810 7,830 Current liabilities 36,400 44,700 Total credit sales 201,000 250,000 Collections on accounts receivable 188,000 229,000 Blue management is preparing for a meeting with its bank concerning renewal of a loan and has collected the following information related to the above balances 1 The cash reported at December 31, 2020, reflects the following items petty cash $1,600 and postage stamps $100 The other current assets balance at December 31, 2020, includes the checking account balance of $4,260 2 On November 30, 2020, Blue agreed to accept a 6 month, $4,890 note bearing 12 interest, payable at maturity, from a major client in settlement of a $4,890 bill The above balances do not reflect this transaction 3 Blue factored some accounts receivable at the end of 2020 It transferred accounts totaling $10,000 to Final Factor, Inc with recourse Final Factor will receive the collections from Blues customers and will retain 2 of the balances Final Factor assesses Blue a finance charge of 3 on this transfer The fair value of the recourse liability is $400 However, management has determined that the amount due from the factor and the fair value of the resource obligation have not been recorded, and neither are included in the balances above 4 Blue charged off uncollectible accounts with balances of $1,600 On the basis of the latest available information, the 2020 provision for bad debts is estimated to be 2 5 of accounts receivable (a) Incorrect answer iconYour answer is incorrect Based on the above transactions, determine the balance for (1) Accounts Receivable and (2) Allowance for Doubtful Accounts at December 31, 2020 (Round answers to 0 decimal places, e g 125 ) Accounts receivable ending balance $ Allowance for doubtful ending balance $

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 01, 2024

The Blue Pub provides catering services to local businesses. The following information was available for The Blue Pub for the years ended December 31, 2019

The Blue Pub provides catering services to local businesses. The following information was available for The Blue Pub for the years ended December 31, 2019 and 2020.

	December 31, 2019		December 31, 2020
Cash	$	1,880	$	1,700
Accounts receivable		46,500		?
Allowance for doubtful accounts		600		?
Other current assets		8,810		7,830
Current liabilities		36,400		44,700
Total credit sales		201,000		250,000
Collections on accounts receivable		188,000		229,000

Blue management is preparing for a meeting with its bank concerning renewal of a loan and has collected the following information related to the above balances.

1.		The cash reported at December 31, 2020, reflects the following items: petty cash $1,600 and postage stamps $100. The other current assets balance at December 31, 2020, includes the checking account balance of $4,260.
2.		On November 30, 2020, Blue agreed to accept a 6-month, $4,890 note bearing 12% interest, payable at maturity, from a major client in settlement of a $4,890 bill. The above balances do not reflect this transaction.
3.		Blue factored some accounts receivable at the end of 2020. It transferred accounts totaling $10,000 to Final Factor, Inc. with recourse. Final Factor will receive the collections from Blues customers and will retain 2% of the balances. Final Factor assesses Blue a finance charge of 3% on this transfer. The fair value of the recourse liability is $400. However, management has determined that the amount due from the factor and the fair value of the resource obligation have not been recorded, and neither are included in the balances above.
4.		Blue charged off uncollectible accounts with balances of $1,600. On the basis of the latest available information, the 2020 provision for bad debts is estimated to be 2.5% of accounts receivable.

(a)

Incorrect answer iconYour answer is incorrect.

Based on the above transactions, determine the balance for (1) Accounts Receivable and (2) Allowance for Doubtful Accounts at December 31, 2020. (Round answers to 0 decimal places, e.g. 125.)